<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-K
     (MARK ONE)

     [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
                                       OR
     [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the transition period from ________________ to ________________

                        Commission file number 0-29114

                                 Vistana, Inc.
                                 -------------
            (Exact name of registrant as specified in its charter)

          Florida                                          59-3415620
          -------------                               ---------------
    (State or other jurisdiction of    (I.R.S. Employer Identification No.)
     incorporation or organization)

           8801 Vistana Centre Drive, Orlando, Florida         32821
           -------------------------------------------      --------
           (Address of principal executive offices)       (Zip Code)

                                (407) 239-3000
                                --------------
             (Registrant's telephone number, including area code)

          Securities registered pursuant to Section 12(b) of the Act:
                                     None

          Securities registered pursuant to Section 12(g) of the Act:
                    Common Stock, par value $.01 per share

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   Yes    X       No _______
                                                -------              

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     As of March 5, 1999, there were 21,224,172 shares of the registrant's
common stock outstanding.  The aggregate market value of the registrant's voting
stock that was held by non-affiliates on such date was $128,810,358 based on the
closing sale price of the registrant's common stock on March 5, 1999 as reported
on the Nasdaq National Market.

                      Documents Incorporated by Reference:

     Portions of Vistana, Inc.'s 1998 Annual Report to Shareholders and
definitive proxy statement for its annual meeting of shareholders to be held on
April 28, 1999 are incorporated by reference into Parts II and III of this Form
10-K, as indicated.
<PAGE>
 
                                     PART I

     Except where otherwise indicated, the information contained in this Annual
Report on Form 10-K ("Annual Report") assumes Vacation Ownership Interests
("VOI's") (as defined herein) are presented on an annual, as opposed to an
alternate-year, basis.  See "Item 1. Business-Company Resorts."  Unless the
context otherwise requires, the "Company" means Vistana, Inc., its consolidated
subsidiaries, its corporate and partnership predecessors, partnerships in which
the Company owns a controlling interest and, following September 16, 1997,
Success and Points (as defined herein).  Unless otherwise indicated, all
vacation ownership industry data contained herein is derived from information
prepared by the American Resort Development Association ("ARDA"), the industry's
principal trade association.

     Vistana(R) and Vistana Resort(R) are trademarks of Vistana, Inc. or its
affiliates.  Embassy Vacation Resort(R), Hampton Vacation Resort(R) and Homewood
Vacation Resort/SM/ are trademarks and service marks of Promus Hotel
Corporation, its subsidiaries and affiliates.  PGA(R), PGA Golf Club/TM/ and PGA
Village/TM/ are trademarks of The Professional Golfers' Association of America.
World Golf Village/(R)/ is a trademark of World Golf Foundation, Inc.
Atlantis(R) is a service mark for lodging accommodation services of Sun
International Representation, Inc.

     This Annual Report, including all information incorporated by reference
herein, contains "forward-looking statements" within the meaning of the federal
securities laws, relating to, among other things, the Company's future prospects
and financial performance, expansion plans, business strategies and their
intended results.  Individuals considering an investment in the Company are
cautioned that such statements are predictions only and that actual events or
results may differ materially. Such statements are subject to numerous risks and
uncertainties, including the effects of economic conditions, interest rates,
consumer demand, payment and default risks on customer mortgages receivable,
competitive conditions, the impact of government regulations and approval
requirements, the availability and cost of capital to finance future growth, the
ability to acquire, develop and sell vacation ownership inventory cost-
effectively, the availability of qualified personnel, the ability to transfer
the experience and historical operating results of the Company's mature resorts
to its new properties, the ability to avoid disruption from year 2000 technology
problems,  the satisfactory completion of proposed joint venture, licensing,
financing and other agreements, the satisfaction of various conditions and
compliance with various covenants contained in the Company's existing
agreements, and other risks described elsewhere in this Annual Report. Such
risks could cause actual results to differ materially from those expressed or
implied by the forward-looking statements contained in this Annual Report.

Item 1.  Business.

General

     Founded in 1980, the Company is a leading developer and operator of high
quality timeshare resorts in the United States.  The Company's principal
operations consist of acquiring, developing and operating vacation ownership
resorts, marketing and selling VOI's in its resorts (which typically entitle the
buyer to ownership of a fully-furnished unit for a one-week period on either an
annual or an alternate-year basis), and providing financing to customers who
purchase VOI's at its resorts.  The Company also furnishes management,
operations, maintenance, and telecommunications services at its resorts and
provides limited telecommunications contracting services to other customers.
<PAGE>
 
     At December 31, 1998, the Company operated eight vacation ownership
resorts, with four in active sales.  Four of these resorts are in Florida
(Vistana Resort in Orlando, Hampton Vacation Resort-Oak Plantation in Kissimmee,
Vistana's Beach Club on Hutchinson Island, and Vistana Resort at World Golf
Village in St. Augustine), two in Colorado (Eagle Point in Vail and Falcon Point
in Avon), one in South Carolina (Embassy Vacation Resort at Myrtle Beach) and
one in Arizona (Villas of Cave Creek located north of Scottsdale).  Available
inventory at four of these eight resorts (Vistana's Beach Club, Eagle Point,
Falcon Point and Villas of Cave Creek) is primarily limited to VOI's that the
Company has reacquired in connection with owner upgrades and defaults under
customer mortgages.  At December 31, 1998, the Company had two new resorts under
development where VOI's were being sold on a pre-opening basis.  These resorts
are Lakeside Terrace in Avon, Colorado (which opened in the first quarter 1999)
and Embassy Vacation Resort in Scottsdale, Arizona (which is scheduled to open
in late March 1999).  In addition, the Company acts as exclusive sales and
marketing agent for The Christie Lodge, a large vacation ownership resort in
Avon, Colorado.  The Company is also planning three new resorts: PGA Vacation
Resort by Vistana at PGA Village in Port St. Lucie, Florida; Harborside at
Atlantis on Paradise Island in The Bahamas (which will be developed in a joint
venture with a subsidiary of Sun International Hotels Limited ("Sun")); and a
large successor property to the Company's flagship Vistana Resort in Orlando.
See "Company-Resorts."

     During its 18-year history, the Company has sold in excess of $820 million
of VOI's and has developed an ownership base of over 79,000 VOI owners residing
in more than 100 countries.  The Company was the first to open a vacation
ownership resort in the Orlando, Florida market, which has become one of the
largest vacation ownership resort markets in the world in terms of VOI's sold.

     Since completing its initial public offering in March 1997, the Company has
been using four business strategies to achieve growth: (i) continuing sales of
VOI's at the Company's existing resorts; (ii) developing and selling additional
vacation ownership resorts; (iii) pursuing selected acquisitions; and (iv)
improving margins, principally by reducing the cost of the Company's financing.
There is no assurance that these strategies will be successful during future
periods.

  The Company's ability to develop and sell additional vacation ownership
resorts will depend on a number of factors, including (i) the availability of
attractive resort development opportunities; (ii) the Company's ability to
acquire unimproved or improved real estate for such opportunities on
economically feasible terms; (iii) the Company's ability to obtain the capital
necessary to finance the acquisition, construction, development, conversion and
expansion of vacation ownership resorts, as well as to cover any necessary
sales, marketing and resort operation expenditures; (iv) the Company's ability
to market and sell VOI's at newly-developed vacation ownership resorts in
accordance with budgeted parameters; and (v) the Company's ability to manage
newly-developed vacation ownership resorts cost-effectively and in a manner
which results in significant customer satisfaction.  There can be no assurance
that the Company will be successful with respect to any or all of these factors.

                                      -2-
<PAGE>
 
Company Resorts

     The following table sets forth certain information as of December 31, 1998
and for the year then ended regarding each of the Company's existing vacation
ownership resorts, resorts under construction and planned resorts, including
location, the year sales of VOI's commenced (or are expected to commence), the
number of existing and total planned units, the number of VOI's sold at each
existing resort since its development by the Company and the number of VOI's
sold during the year ended December 31, 1998, the average sales price of VOI's
sold during the year ended December 31, 1998 and the number of VOI's available
for sale at December 31, 1998 and after giving effect to planned expansion.  The
exact number of units ultimately constructed and VOI's available for sale at
each resort may differ from the following planned estimates based on, among
other things, future land use, project development, site layout considerations
and customer demand.  The number of VOI's available for sale will also vary
depending upon whether certain two-bedroom lockoff units are sold as a single
unit (as assumed in the following table) or as two one-bedroom units.  In
addition, the Company's construction and development of new vacation ownership
resorts or additional units at its existing resorts (and its sales of the
related VOI's) is dependent upon general economic conditions and other factors
and may also be subject to delay as a result of certain circumstances, some of
which are not within the Company's control.

                                      -3-
<PAGE>
 
<TABLE>
<CAPTION>
                                                                                                              Unsold              
                                                                                  VOI's                    VOI's at Unsold 
                                                              Units at Resort     Sold(a)                     Resorts(a)
                                                              ---------------- --------------           -------------------- 
                                                   Year Sales                                 Average 
                                                   Commenced/                                  Sales 
     Vacation Ownership                           Expected to           Total                 Price in   Current    Planned  
           Resorts                 Location       Commence(b) Current  Planned Total    1998   1998(a)  Inventory  Expansion 
----------------------------- ------------------ ------------ -------  ------- ------  ------ --------- ---------  --------- 
<S>                           <C>                <C>          <C>      <C>     <C>     <C>    <C>       <C>        <C>       
Existing Resorts:                                                                                                            
Vistana Resort (c)            Orlando, Florida          1980    1,326    1,539 71,341   8,865  $10,396      4,087     10,655 
Vistana's Beach               Hutchinson Island,                                                                             
   Club (d) (e)                Florida                  1989       76       76  3,965      33  $ 9,969        159          0 
Hampton Vacation                                                                                                             
   Resort-Oak                                                                                                                
   Plantation (f)             Kissimmee, Florida        1996      242      242  3,757   2,324  $ 7,469      9,386          0 
Eagle Point Resort (d) (g)    Vail, Colorado            1987       54       54  3,664      95  $ 9,537         17          0 
Falcon Point Resort (d) (h)   Avon, Colorado            1986       58       58  4,574   1,176  $ 9,024        472          0 
Villas of Cave Creek (d) (i)  Cave Creek,                                                                                    
                               Arizona                  1996       25       25    950     452  $10,040        181          0 
Embassy Vacation              Myrtle Beach,                                                                                  
   Resort at Myrtle Beach (j)  South Carolina           1997       88      550  2,477   1,980  $ 9,146      2,317     23,562
Vistana Resort at World       St. Augustine,                                                                                 
   Golf Village (k)            Florida                  1998      102      408    548     548  $11,518      4,715     15,606 
                                                                                                                            
Resorts Under                                                                                                                
   Development:                                                                                                              
Embassy Vacation Resort       Scottsdale,                                                                                    
    at Scottsdale (l)          Arizona                  1998       --      150  2,218   2,218  $ 9,213         --      6,606 
Lakeside Terrace (m)          Avon, Colorado            1998       --       24    446     446  $12,483         --        920 
                                                                                                                             
Planned Resorts:                                                                                                             
PGA Vacation Resort by        Port St. Lucie,                                                                                
   Vistana (n)                 Florida                  1999       --      306     --      --       --         --     15,606 
Harborside at Atlantis (o)    Paradise Island,                                                                               
                               The Bahamas              1999       --      375     --      --       --         --     19,125 
Vistana II (p)                Orlando, Florida          1999       --    1,400     --      --       --         --     71,400 
                                                             --------------------------------           --------------------
                                                        TOTAL   1,971    5,207 93,940  18,137              21,334    163,480 
                                                             ================================           ==================== 
</TABLE> 
------------
(a)   The Company sells both annual VOI's (entitling the owner to the use of a
      unit for a one-week period on an annual basis) and alternate-year VOI's
      (entitling the owner to the use of a unit for a one-week period on an
      alternate-year basis) with respect to 51 weeks per unit per year (with one
      week reserved for maintenance of the unit) or 52 weeks per unit per year
      (with maintenance scheduled as occupancy permits), depending upon the
      resort. Accordingly, the Company is generally able to sell 51 or 52 annual
      VOI's or 102 or 104 alternate-year VOI's per unit. For purposes of
      calculating the number of VOI's Sold and Average Sales Price in 1998, data
      with respect to VOI's reflects VOI's sold regardless of classification as
      an annual or alternate-year VOI. If these figures were adjusted on an
      annualized basis, the number of VOI's sold would be decreased and the
      Average Sales Price would be increased. VOI's Sold includes pre-opening
      sales for which the revenue is recognized using the percentage of
      completion method. For purposes of calculating Unsold VOI's at Resorts,
      both the Current Inventory and Planned Expansion numbers are based on
      sales of VOI's on an annual basis only and assume the sale of 51 weeks per
      unit per year and the sale of two-bedroom lockoff units as a single unit.
      To the extent that alternate-year VOI's or 52 weeks per unit per year are
      sold, the actual number of Unsold VOI's at Resorts would be increased.
(b)   Dates listed represent the dates the Company began recording (or expects
      to begin recording) sales, including pre-opening sales, of VOI's for
      financial reporting purposes.
(c)   At December 31, 1998, Vistana Resort consisted of eight development
      phases, seven of which had been completed and one of which was in
      development. The number of units at Vistana Resort at December 31, 1998
      included (i) 1,326 existing units and (ii) 213 additional planned units
      (representing an estimated 10,863 annual VOI's, or 10,655 net of VOI's
      sold as of December 31, 1998). Construction of 110 of the additional units
      (representing 5,610 VOI's) was underway at that date. VOI's Sold includes
      pre-opening sales for certain of the units under 

                                      -4-
<PAGE>
 
      construction. The Company constructs additional units at various times
      depending upon general market conditions and other factors. Accordingly,
      construction of the remaining 103 additional units will be commenced from
      time to time as demand and other conditions merit. Figures with respect to
      this resort assume that all units to be constructed will consist of one-
      and two-bedroom units; however, the actual number of additional VOI's
      resulting from planned construction could vary depending upon the
      configuration of these units.
(d)   Inventory at this resort is primarily limited to VOI's that the Company
      has reacquired in connection with owner upgrades and defaults under
      customer mortgages.
(e)   Vistana's Beach Club consists of two buildings containing a total of 76
      existing units, which represent 3,876 VOI's.
(f)   Hampton Vacation Resort-Oak Plantation consists of 242 existing units,
      representing 12,342 annual VOI's. Prior to its acquisition by the Company
      in June 1996, this property was operated by a third party as a rental
      apartment complex. The Company commenced conversion of the property into a
      vacation ownership resort in July 1996. As of December 31, 1998, the
      conversion of 236 units (representing 12,036 annual VOI's) had been
      completed. The Company intends to convert the remaining 6 units at various
      times depending upon general market conditions and other factors. The
      Company currently has no plans to build any additional units at this
      resort. Hampton Vacation Resort-Oak Plantation is operated as a Hampton
      Vacation Resort franchise. The Company owns a 67% controlling interest in
      the limited partnership that operates the resort.
(g)   Eagle Point Resort consists of 54 existing units, representing 2,808
      VOI's. This resort was acquired by the Company in September 1997. See
      "Business-Acquisition of Success and Points."
(h)   Falcon Point Resort consists of 58 existing units, representing 3,016
      VOI's. This resort was acquired by the Company in September 1997. See
      "Business-Acquisition of Success and Points."
(i)   Villas of Cave Creek consists of 25 existing units, representing 1,300
      VOI's.  This resort was acquired by the Company in September 1997. See
      "Business-Acquisition of Success and Points."
(j)   Embassy Vacation Resort at Myrtle Beach consists of 88 units, representing
      an estimated 4,488 annual VOI's. The Company commenced construction of the
      28-unit second phase of this resort, representing 1,428 annual VOI's,
      during the fourth quarter of 1998. The Company also has an option until
      December 31, 2003 to acquire up to 24 additional acres of contiguous
      property for phased expansion of this resort, with a total of 550 units,
      or 28,050 annual VOI's, planned at build-out in future years. Because the
      Company constructs additional units at its resorts based on general market
      conditions and other factors, construction of the remaining 434 units at
      this resort (assuming acquisition of the remaining 24 acres) will be
      commenced from time to time as demand and other conditions merit. Myrtle
      Beach is operated as an Embassy Vacation Resort franchise.
(k)   Vistana Resort at World Golf Village consists of 102 units, representing
      an estimated 5,202 annual VOI's with a total of 408 units, or 20,808
      annual VOI's, being planned through build-out, over future years. Because
      the Company constructs additional units at its resorts based on general
      market conditions and other factors, construction of the remaining 306
      units at this resort will be commenced from time to time as demand and
      other conditions merit. The Company owns a 37.5% controlling interest in
      the limited partnership that owns Vistana Resort at World Golf Village.
(l)   Embassy Vacation Resort at Scottsdale is expected to consist of 150 units,
      representing an estimated 7,800 annual VOI's, or 6,606 net of VOI's sold
      as of December 31, 1998. The Company commenced construction of the 72-unit
      first phase of this resort (representing 3,744 annual VOI's) during the
      second quarter of 1998. The first buildings in this phase are scheduled to
      open in March 1999. VOI's sold at this resort consist of pre-opening
      sales. Because the Company constructs additional units at its resorts
      based on general market conditions and other factors, construction of the
      remaining 78 units at this resort will be commenced from time to time as
      demand and other conditions merit. The Scottsdale property is expected to
      be operated as an Embassy Vacation Resort franchise.
(m)   Lakeside Terrace consists of 24 units, representing an estimated 1,248
      annual VOI's, or 920 net of VOI's sold as of December 31, 1998, located on
      property adjacent to the Company's Falcon Point Resort. The resort opened
      during the first quarter of 1999. VOI's sold at this resort consist of 
      pre-opening sales.
(n)   PGA Vacation Resort by Vistana is expected to consist of an estimated 306
      units, representing an estimated 15,606 annual VOI's, and will be
      constructed by the Company on 25 acres of land which the Company acquired
      in September 1997. The Company anticipates that it will commence
      construction of the 30-unit first phase of this resort (representing 1,530
      annual VOI's) during the second quarter of 1999. Because the Company
      constructs additional units at its resorts based on general market
      conditions and other factors, construction of the remaining 276 units at
      this resort will be commenced from time to time as demand and other
      conditions merit.
(o)   Harborside at Atlantis is expected to consist of an estimated 375 units,
      representing 19,125 VOI's. The Company expects to commence construction of
      82-units of the first phase of this resort (representing 4,182 annual
      VOI's) during mid-1999. The Company intends to commence construction of
      the remaining additional units from time to time as demand and other
      conditions merit. The proposed resort is being developed as a joint
      venture between subsidiaries of the Company and Sun. The Company expects
      to have a 50% ownership interest in the resort.
(p)   Vistana II is expected to consist of an estimated 1,400 units,
      representing 71,400 VOI's. The Company expects to commence construction on
      the first phase of this resort during mid-1999. The Company intends to
      commence construction on the remaining phases from time to time as demand
      and other conditions merit. This resort, which has not yet been named, is
      being developed as a successor to the Company's Vistana Resort.

                                      -5-
<PAGE>
 
     Pricing of VOI's.  The following table sets forth the current range of
selling prices of annual and alternate-year VOI's at each of the Company's
resorts:

<TABLE>
<CAPTION>

                                                                              Selling Prices(a)
                                                          ---------------------------------------------------------
                                                                Annual Vacation           Alternate-year Vacation
Resort                                                        Ownership Interests           Ownership Interests
-------------------------------------------------------   ---------------------------   ---------------------------
<S>                                                       <C>                           <C>
Vistana Resort(b)......................................        $  7,950  -  $  19,000        $  4,770  -  $  11,500
Vistana's Beach Club(c)................................        $  8,995  -  $   9,950                 N/A
Hampton Vacation Resort-Oak Plantation(d)..............        $  7,050  -  $  10,750        $  4,350  -  $   6,550
Eagle Point Resort(d)..................................        $  7,995  -  $  12,995        $  5,995  -  $   7,495
Falcon Point Resort(b).................................        $  8,995  -  $  17,995        $  6,495  -  $   9,995
Villas of Cave Creek(c)................................        $ 13,495  -  $  13,495        $  9,495  -  $   9,495
Embassy Vacation Resort at Myrtle Beach(b).............        $  4,500  -  $  17,500        $  2,800  -  $  10,600
Vistana Resort at World Golf Village(b)................        $  8,200  -  $  19,000        $  5,100  -  $  11,500
Lakeside Terrace (c)...................................        $ 12,995  -  $  34,995        $  8,495  -  $  20,495
Embassy Vacation Resort at Scottsdale(c)(e)............        $  9,495  -  $  16,995        $  6,495  -  $  10,995
PGA Vacation Resort by Vistana.........................              Not determined                Not determined
Harborside at Atlantis.................................              Not determined                Not determined
Vistana II.............................................              Not determined                Not determined

</TABLE>

-------------
(a) Selling prices vary depending upon the specific calendar week or season to
    which a VOI relates and unit-specific factors.
(b) Includes one-, two- and two-bedroom lockoff unit VOI's.
(c) Includes two-bedroom unit VOI's only.
(d) Includes one- and two-bedroom unit VOI's.
(e) Selling prices listed reflect pre-opening prices.

     Vistana Resort (Orlando, Florida).  Vistana Resort, the Company's flagship
vacation ownership property, is an award-winning destination resort located less
than one mile from the Walt Disney World Resort(R) complex. Vistana Resort
opened as the first vacation ownership resort in Orlando in 1980 with an initial
phase containing 98 units on a 25-acre parcel.  At December 31, 1998, the resort
had 1,326 units (with 1,539 units planned at build-out) in eight villages. The
resort has received the Gold Crown designation since the inception of the
designation by Resort Condominiums International ("RCI").

     The gated-access resort consists of a 135-acre complex that features
tropical landscaping, lakes, waterfalls, fountains, walking paths, scenic
bridges and gazebos.  The resort's athletic facilities include 7 recreation
centers, 13 lighted tennis courts, a tennis pro shop, 7 outdoor temperature-
controlled swimming pools, 7 outdoor whirlpools, 5 children's pools, an 18-hole
miniature golf course, lighted basketball courts, sand volleyball pits,
shuffleboard courts and other recreational amenities.  Other guest-oriented
amenities at Vistana Resort include three restaurants and a general store
containing a Pizza Hut(R) facility.  The units at Vistana Resort sleep from four
to eight people (depending upon floorplan) and include amenities such as a
fully-equipped kitchen, washer/dryer, three color televisions with cable
service, a videocassette player, and an outdoor terrace or balcony.  Most units
have master bathrooms that include a whirlpool tub or feature screened terraces
or balconies with water views.  Later phases include units with an optional two-
bedroom 

                                      -6-
<PAGE>
 
lockoff floor plan, a feature that allows the unit to be divided into two
separate one-bedroom units or a studio and a one-bedroom unit, depending upon
floor plan. Owners of the lockoff units have increased flexibility regarding the
use of their VOI including splitting the unit and using each portion for
separate one-week vacations.

     Vistana's Beach Club (Hutchinson Island, Florida).  Vistana's Beach Club on
Hutchinson Island is located on Florida's Treasure Coast, approximately 40 miles
north of West Palm Beach and approximately a two hour drive from Orlando.
Located on a 3.5-acre oceanfront parcel, Vistana's Beach Club was purchased by
the Company in January 1989.  The resort consists of a nine-story building
containing 48 units and an eight-story building containing 28 units.  The resort
has numerous recreational amenities, including a freshwater swimming pool,
outdoor whirlpool, children's pool, elevated sun deck and access to two tennis
courts.  Vistana's Beach Club contains 76 fully-equipped two-bedroom, two-
bathroom oceanfront units, each of which includes a terrace with a view of the
Atlantic Ocean.  The units sleep up to six people (depending upon floorplan) and
include amenities such as a fully-equipped kitchen, washer/dryer, color
televisions with cable service and a videocassette player.  The resort has
received RCI's Gold Crown designation.  Sales at this resort consist primarily
of previously-sold VOI's that the Company has reacquired in connection with
owner upgrades and defaults under customer mortgages.

     Hampton Vacation Resort-Oak Plantation (Kissimmee, Florida). Hampton
Vacation Resort-Oak Plantation is a 242-unit property located in Kissimmee,
Florida, approximately ten miles from Walt Disney World Resort.  The resort was
developed from a multi-family rental apartment complex purchased in 1996.  Sales
of the first phase containing 32 units commenced in October 1996.  The gated-
access 16-acre resort contains one- and two-bedroom units, each of which offers
a fully-equipped kitchen.  The landscaped resort includes a scenic lake with a
lighted fountain, swimming pools and other recreational amenities.  The resort
has received the Gold Crown designation from RCI.  The property is operated as a
Hampton Vacation Resort franchise.  The Company holds a 67% controlling
ownership interest in the limited partnership that operates the resort.  See
"Promus Relationship."

     Eagle Point Resort (Vail, Colorado).  Eagle Point Resort is a 54-unit,
courtyard resort which is bordered by Gore Creek in Vail, Colorado.  Amenities
include a heated swimming pool, indoor and outdoor hot tubs, a sauna and a coin-
operated laundry.  Additionally, Eagle Point Resort offers a complimentary
shuttle service to the Lionshead Gondola at Vail during the ski season.  Eagle
Point has one- and two-bedroom units, each of which includes a fully-equipped
kitchen.  The Company acquired the remaining inventory in the resort in
September 1997. See "Business-Acquisition of Success and Points."  Eagle Point
participates in the II exchange network but does not carry a rating by Interval
International ("II"), a resort exchange network, or RCI.  Sales at this resort
consist primarily of previously-sold VOI's that the Company has reacquired in
connection with owner upgrades and defaults under customer mortgages.

     Falcon Point Resort (Avon, Colorado).  Falcon Point is a 58-unit
condominium resort located in Avon, Colorado at the foot of Beaver Creek Ski
Area in Vail Valley.  The Company acquired the remaining inventory in the resort
in September 1997. See "Business-Acquisition of Success and Points."  Amenities
include a clubhouse, a heated swimming pool, indoor and outdoor hot tubs, sauna,
ski lockers and a coin operated laundry.  This resort contains studio, as well
as one- and two-bedroom units.  All Falcon Point units, except studios, contain
a fully-equipped kitchen.  The resort has received a Five Star rating from II.
Sales at this resort consist primarily of previously-sold VOI's that the Company
has reacquired in connection with owner upgrades and defaults under customer
mortgages.

                                      -7-
<PAGE>
 
     Villas of Cave Creek (Cave Creek, Arizona).  The Villas of Cave Creek is
comprised of 25, two-story villas located at the base of Black Mountain in the
Sonoran Desert foothills, just north of Scottsdale.  Amenities include two
swimming pools, a clubhouse, an exercise room, a lawn game area and a
playground.  All of the villas have a master suite, fully-equipped kitchen,
dining room, living room, a second bedroom and two full baths. The Company
acquired the remaining inventory in the resort in its acquisition of Success and
Points in September 1997.  The resort has received a Five Star rating from II.
Sales at this resort consist primarily of previously-sold VOI's that the Company
has reacquired in connection with owner upgrades and defaults under customer
mortgages.

     Embassy Vacation Resort at Myrtle Beach (Myrtle Beach, South Carolina).
Embassy Vacation Resort at Myrtle Beach is located in Myrtle Beach, adjacent to
Broadway at the Beach, a large entertainment and specialty retail complex.  The
first phase of 88 units opened in the second quarter of 1998.  An additional 28
units are under construction with a total of 550 units planned at build-out.
The first 116 units are located on approximately 16 acres of a 40-acre site.
The Company holds options to acquire the remainder of the 40 acres in multiple
phases through 2003.  This resort contains one-, two- and two-bedroom lockoff
units, each of which offers a fully-equipped kitchen, washer/dryer, whirlpool
tub, stereo system, color television and video cassette player and outdoor
balcony.  Amenities include a heated indoor/outdoor swimming pool, tennis court,
basketball court, sand volleyball court, kids' activity room and exercise room.
The resort has received RCI's Gold Crown designation.  The Company operates the
property as an Embassy Vacation Resort franchise.  See "Promus Relationship."

     Vistana Resort at World Golf Village (St. Augustine, Florida). Vistana
Resort at World Golf Village is located in the World Golf Village complex near
St. Augustine, Florida.  The first 102-unit phase of a planned 408-unit resort
opened in the second quarter of 1998.  Vistana Resort at World Golf Village
consists of one- and two-bedroom units which sleep from four to eight people
(depending upon floorplan) and include features such as a fully-equipped
kitchen, washer/dryer, color televisions with cable service, a videocassette
player and an outdoor terrace or balcony.  The resort is located adjacent to the
17th and 18th fairways of the first golf course at World Golf Village.  Resort
guests and owners have preferred access to daily tee times on the course and a
second course which is in the development stage.  The resort has received RCI's
Gold Crown designation.

     In addition to the Company's vacation ownership resort, the World Golf
Village resort complex also includes the World Golf Hall of Fame, a championship
golf course named in honor of Sam Snead and Gene Sarazen, a PGA Tour licensed
golf academy, the International Golf Library and Resource Center, a 300-room
World Golf Village Resort Hotel and 80,000 square-foot St. Johns County
Conference Center, themed retail space, the headquarters and television
production studios for PGA Tour Productions and a theater.  The component
facilities within World Golf Village are linked by the Walk of Champions
honoring each member of the World Golf Hall of Fame.  A total of three golf
courses are planned.

     The World Gold Hall of Fame is operated by World Golf Foundation, Inc.,
which is supported by the world's leading golf organizations. The member
organizations of World Golf Foundation, Inc. include the PGA Tour, PGA of
America, Ladies Professional Golf Association, Augusta National Golf Club, Royal
Canadian Golf Association, Royal & Ancient Golf Club of St. Andrews, PGA
European Tour, PGA Tour of Japan and FNB Tour of Southern Africa.

                                      -8-
<PAGE>
 
     The Company holds a 37.5% controlling ownership interest in a limited
partnership which is developing Vistana Resort at World Golf Village.  The
partnership has the exclusive right to develop and market VOI's at World Golf
Village, and has exclusive multi-year marketing agreements for solicitation at
key locations throughout World Golf Village, including the golf course, Walk of
Champions and retail facilities.  Neither the partnership nor the Company is
developing World Golf Village itself or any of the other facilities or
amenities.  The Company also has entered into an agreement with PGA Tour Golf
Course Properties, Inc. that allows the Company access to PGA Tour databases for
marketing purposes.

     Embassy Vacation Resort at Scottsdale (Scottsdale, Arizona).  In 1999, the
Company commenced construction of a 150-unit Embassy Vacation Resort at
Scottsdale on a 10-acre site which the Company purchased in 1997 near the TPC
Scottsdale golf course. Construction of the 72-unit first phase is scheduled to
be completed during the second quarter of 1999, with the initial units opening
in late March 1999. Amenities are expected to include a clubhouse, a recreation
complex, a free-form swimming pool, a children's club and a fully-equipped
fitness center. All of the villas are anticipated to have two-bedrooms, two
baths, a fully-equipped kitchen, dining room, living room, and an in-room washer
and dryer. The resort has received RCI's Gold Crown designation. The Scottsdale
property is expected to be operated as an Embassy Vacation Resort franchise. See
"Promus Relationship."

     Lakeside Terrace (Avon, Colorado). Lakeside Terrace is a 24-unit
condominium resort located in the heart of ski country in Avon, Colorado, near
Beaver Creek and adjacent to the Company's Falcon Point Resort. Lakeside Terrace
contains two-bedroom units, each of which includes a fully-equipped kitchen, gas
fireplace, two whirlpool tubs, wet bar and two color televisions with cable
access. Amenities include an indoor/outdoor pool, dry sauna, recreation facility
and covered parking.  The resort has received a five-star rating from II.

     PGA Vacation Resort by Vistana (Port St. Lucie, Florida).  In September
1997, the Company purchased from an affiliate of PGA of America approximately 25
acres of land within PGA Village in Port St. Lucie, Florida for the purpose of
developing, marketing and operating a vacation ownership resort.  The resort
will be developed as a PGA Vacation Resort by Vistana and will be contiguous to
the South Course of the PGA Golf Club at PGA Village, a nationally-acclaimed
golf course complex that opened in early 1996.  PGA of America is constructing a
golf learning center and a third golf course at the facility.  In addition to
resort amenities, the PGA Vacation Resort by Vistana will, pursuant to a golf
access agreement, also offer its owners and renters preferred access to the PGA
Golf Club and other PGA golf courses in St. Lucie County.  The resort is planned
to contain approximately 306 units at build-out.  The 30-unit first phase is
expected to open in 2000.  See "PGA of America Relationship."

     Harborside at Atlantis (Paradise Island, The Bahamas).  In November 1997,
the Company and Sun entered into an agreement to form a 50-50 joint venture to
design, develop, sell and manage a planned vacation ownership resort with up to
375 units adjacent to Sun's Atlantis Resort and Casino on Paradise Island, The
Bahamas.  Construction of the 82-unit first phase is expected to commence during
mid-1999 on approximately ten acres of land that Sun plans to contribute to the
joint venture.  The Company plans to contribute up to approximately $7.8 million
to the joint venture as part of the initial development.  The agreement calls
for Sun to oversee the development and construction and manage the hospitality
elements of Harborside at Atlantis and for the Company to oversee all timeshare
operations, including portfolio management, sales and marketing, and property
management services.  The resort is expected to open in 2000.

                                      -9-
<PAGE>
 
     Accommodations at Harborside at Atlantis are expected to consist almost
entirely of two-bedroom lockoff units, each of which will contain a separate
master bedroom with a whirlpool tub, a fully-equipped kitchen, and living and
dining areas.  Owners and guests at the resort will have access to Sun's
Atlantis Resort and Casino, including all of its amenities.  The Atlantis Resort
and Casino is a 2,340-room luxury resort with the largest casino in the
Caribbean.  Amenities of the Atlantis Resort include a 14-acre waterscape, a
lagoon, waterfalls, water slides, underground grottos, a rope suspension bridge,
a 63-berth world class marina, full resort spa and five pools.  Other amenities
include 12 indoor and outdoor restaurants and six lounges.  Guests can also
enjoy snorkeling, scuba diving, windsurfing, sailing, championship tennis and
golf, and an extensive children's program.

     Vistana II at Orlando ( Orlando, Florida).  In 1998, the Company purchased
approximately 45 acres of land in Orlando, Florida on which it plans to
construct a successor resort to the Company's flagship Vistana Resort.  The
Company has an option to purchase approximately 45 acres of contiguous land for
additional phases through 2003.  The resort is expected to contain approximately
1,400 units at build-out.  The Company expects to begin construction on the
first phase during mid-1999 and to open the resort in 2000.  The name of the
proposed resort has not yet been determined.

Risks Associated with World Golf Village

     The success of the Company's Vistana Resort at World Golf Village is
dependent upon the continued development and promotion by third parties of the
surrounding properties and related component facilities comprising the World
Golf Village project and the planned community of Saint Johns in which it is
located. Although the Company has agreements with such third parties respecting
such matters, there can be no assurance that such third parties will fulfill
their obligations under such agreements. In addition, the Company is
contingently liable for 15% of annual debt service shortfalls on certain taxable
revenue bonds (the "County Bonds") issued to finance the convention center at
World Golf Village. If the annual pledged revenues from the World Golf Village
component facilities are not adequate to support the required debt service on
the County Bonds, the Company's results of operations at Vistana Resort at World
Golf Village may be materially adversely impacted.

Risks Associated with Development and Construction Activities

  The acquisition, development, construction, conversion and expansion of
existing and new vacation ownership resorts involve a number of risks, including
risks that (i) acquisition or development opportunities may be abandoned,
requiring project costs to be expensed during the current period; (ii)
construction costs may exceed original estimates, possibly making the
development, expansion or conversion uneconomical or unprofitable; (iii)
construction or conversion may not be completed on schedule, possibly resulting
in delayed recognition of revenues and increased interest expense; (iv) zoning,
land-use, construction, occupancy and other required governmental permits and
authorizations may not be obtained or may be delayed; and (v) financing
necessary to complete the acquisition, development, construction, conversion or
expansion activities may not be obtained or may not be available on satisfactory
terms.  As of December 31, 1998, the Company does not have the financing
available to construct and develop all of the vacation ownership resorts it
plans to develop and market. In addition, certain state, local and foreign laws
may impose liability on property developers with respect to construction defects
discovered or repairs made by future owners of such property, and, as a result,
owners may be able to 

                                     -10-
<PAGE>
 
recover from the Company amounts in connection with such defects or repairs
related to the property. Accordingly, there can be no assurance that the Company
will (i) complete development of the remaining phases at its existing resorts;
(ii) undertake and complete the development of its planned resorts; or (iii)
undertake to develop other resorts or complete any such development if
undertaken. As a result of these risks, the Company's revenues and net operating
income may be materially adversely impacted.

Risks Associated with Expansion into New Markets

     Because certain of the Company's recently opened and proposed resorts are
outside the Company's historical geographical area of operation, the Company's
resort development and operation experience does not ensure the success of the
development or operation of these properties or the marketing of VOI's at these
locations.  Accordingly, in connection with these resorts, the Company may be
exposed to a number of risks, including risks associated with (i) the lack of
local market knowledge and experience; (ii) the inability to hire, train and
retain sales, marketing and resort staff at new locations; (iii) the inability
to obtain, or obtain in a timely manner, necessary permits and approvals from
state and local government agencies and qualified construction tradesmen at
competitive prices; (iv) the inability to secure sufficient, cost-effective
marketing relationships with local hospitality, retail and tourist attraction
operators; (v) the inability to capitalize on the new marketing relationships
and development agreements associated with certain of the Company's growth
strategies; and (vi) the uncertainty involved in, and additional costs and cash
flow requirements which may be associated with, selling VOI's prior to
completion of the related units.  Additionally, with respect to any vacation
ownership resort located in a foreign market, such as The Bahamas, the Company's
operations may be materially and adversely affected by developments with respect
to inflation, interest rates, government policies and regulations, import
tariffs, price and wage controls, exchange control regulations, exchange rates,
taxation, political and social instability and other political or economic
developments in or affecting such foreign jurisdiction. The Company's operations
may also be materially and adversely affected by foreign government regulations
which may restrict the Company from using its existing personnel in the foreign
jurisdiction and require the Company to hire and train local workers, some of
whom may have less experience in the vacation ownership industry.

Risks Associated with Resorts Involving the Golf Industry

     The success of the Company's golf-oriented vacation ownership resorts is
substantially dependent upon the continued popularity of golf in general, as
well as the desirability and usage levels of the golf courses and golf-related
facilities associated with the Company's resorts. Linking the success of the
Company's resorts to related golf course operations is a relatively new strategy
for the Company and may require the Company to adopt new sales and marketing
approaches and enter into new business relationships. In addition, there are
numerous other factors that affect the golf industry, including seasonality,
adverse weather conditions, competition and the supply of alternative golf-
related destinations, and the popularity of the sport of golf, any of which may
adversely affect the Company's results of operations at these resorts.
Accordingly, there can be no assurance that this aspect of the Company's growth
strategy will be successful or that the Company will be able to implement this
strategy effectively.

Promus Relationship

  In December 1996, the Company and Promus Hotels, Inc. ("Promus") entered into
an exclusive five-

                                     -11-
<PAGE>
 
year agreement to jointly acquire, develop, market and operate vacation
ownership resorts in North America under Promus' Embassy Vacation Resort,
Hampton Vacation Resort and Homewood Vacation Resort brands (the "Promus
Agreement"). Promus is a wholly-owned operating subsidiary of Promus Hotel
Corporation.

  On March 12, 1999, Promus Hotel Corporation and the Company announced that
they were holding discussions to modify the exclusive nature of their
relationship in order to increase development opportunities for both parties.
The discussions relate, among other things, to the provisions in the Promus
Agreement which restrict Promus from independently developing new vacation
ownership resorts and which prevent the Company from developing vacation
ownership resorts with other multi-hotel brands. The Company is unable to
predict the outcome of such discussions, the effect such discussions may have on
the Promus Agreement or other aspects of the Company's relationship with Promus,
or the effect that any changes in the Promus Agreement or the Company's
relationship with Promus may have on the Company's business or results of
operations.  The following paragraphs describe the Promus Agreement and certain
other relationships between the Company and Promus, prior to any changes that
may occur as a result of the discussions between the parties referenced above.

  Under the Promus Agreement, as originally executed, the Company is Promus'
exclusive joint venture partner for the development and operation of vacation
ownership resorts in North America and also had the option of operating vacation
ownership resorts on a franchise basis.  At December 31, 1998, the Company was
the sole franchisee in North America of the Hampton Vacation Resort and the
Homewood Vacation Resort brands, and one of only two franchisees in North
America of the Embassy Vacation Resort brand.  The Promus Agreement also
provides that, in six selected markets agreed to by the parties, the Company
will be the sole franchisee in North America of the Embassy Vacation Resort
brand.  These six markets consist of three coastal areas of Florida (including
portions of the southeastern and western coasts of Florida and the Panhandle);
the coastal region between Jacksonville, Florida and Myrtle Beach, South
Carolina; Phoenix and Scottsdale, Arizona; and Palm Springs and Palm Desert,
California.  As originally executed, the Promus Agreement precludes the Company
from acquiring or developing vacation ownership resorts with any other multi-
hotel brand, but preserves its ability to develop vacation ownership resorts in
combination with non-hotel brands (such as PGA of America), to develop vacation
ownership resorts with unique, non-multi-hotel brand hotel properties (such as
the Atlantis Resort and Casino), and to acquire or develop vacation ownership
resorts under the Vistana name (other than in the six selected markets referred
to above).

     The Promus Agreement provides that each jointly developed vacation
ownership resort will be acquired, developed and operated by a newly-formed
entity owned equally by Promus and the Company and managed by the Company.  The
parties agreed that each of these entities would enter into a sales and
marketing agreement with the Company, pursuant to which the Company would be
responsible for marketing and sales of VOI's at the resort and for which the
Company would receive a fee based on a percentage of sales and rental revenues.
Additionally, the Company and Promus agreed to enter into a license agreement
and hospitality management agreement, pursuant to which Promus would license the
applicable brand name and provide other hospitality-related services at the
resort and for which Promus would receive a fee based on a percentage of sales
and rental revenues.  The Promus Agreement provides that both parties must first
offer vacation ownership resort development opportunities in the six selected
markets to the joint venture (with certain exceptions for development of the
Company's non-multi-hotel branded resorts).  In the event that one party elects
not to pursue the opportunity, the other party has certain 

                                     -12-
<PAGE>
 
rights to develop the resort independently or, in the case of Promus, franchise
an Embassy Vacation Resort to its existing franchisee. However, if Promus elects
not to pursue an opportunity through the joint venture, the Company may elect to
develop the resort as a Promus franchisee, subject to Promus' standard franchise
approval, on pre-agreed terms, conditions and fees. The Promus Agreement may be
terminated by either party in the event that the parties have not jointly
developed a resort during the first three years of the Promus Agreement (i.e.,
by December 1999). The Promus Agreement is also terminable upon a change in
control of Promus or the Company. Although the Company and Promus have evaluated
a number of new resort development opportunities for possible joint venture, no
firm commitments have been made for any joint venture developments and there is
no assurance that any such commitments will be made. However, Promus has granted
franchises for three of the Company's properties: (i) Hampton Vacation Resort-
Oak Plantation in Florida; (ii) Embassy Vacation Resort at Myrtle Beach in South
Carolina; and (iii) the Embassy Vacation Resort at Scottsdale, currently under
construction in Arizona. See "Company Resorts." There can be no assurance that
the Company will continue to operate these properties as Embassy or Hampton
franchises.

     The Promus Agreement and the relationship between the Company and Promus
may be modified as a result of the discussions between the parties described
above or as a result of other business decisions or events. Management believes
that the Company will be able to develop relationships with other multi-hotel
brands if the exclusivity restrictions of the Promus Agreement are lifted, but
there can be no assurance that the Company will be successful in doing so.

PGA of America Relationship

     The Company and an affiliate of PGA of America have entered into a ten-year
affiliation agreement (the "Affiliation Agreement"), pursuant to which the
Company has the exclusive right to acquire, develop, manage, market and sell
vacation ownership resorts in St. Lucie County, Florida, and potentially in
other, yet to be determined, areas, under the PGA name, initials, trademark and
logo.  PGA Vacation Resort by Vistana is the first resort scheduled to be
developed pursuant to the Affiliation Agreement.  See "Company Resorts."

     Under the Affiliation Agreement, the Company has the right of first offer
to be the developer of additional PGA vacation resorts at other potential
properties (outside St. Lucie County, Florida) identified by the Company or by
PGA of America or its affiliates.  If the parties mutually agree to develop any
other property, the Company will have the exclusive rights and licenses to use
the PGA name, initials, trademark and logos in connection with such property.
In the event that either party elects not to pursue development of another
potential resort, the other party has certain rights to develop that resort
independently.  Except for Port St. Lucie, there are no current commitments for
development of any other vacation ownership resorts, and there is no assurance
that the parties will successfully negotiate and execute any future development
agreements.  If the Company and PGA of America enter into future development
agreements, the Affiliation Agreement contemplates that the parties will execute
similar agreements and covenants as those regarding the PGA Vacation Resort by
Vistana.

     The Company's exclusive right to develop the PGA Vacation Resort by
Vistana, and its right of first offer for other potential vacation ownership
resorts, does not apply to development projects outside St. Lucie County,
Florida which already bear the PGA name.  Likewise, the Affiliation Agreement
does not limit, prohibit or restrict the Company or any of its affiliates from
conducting its business in any manner it 

                                     -13-
<PAGE>
 
determines to be necessary or advantageous to it, including, without limitation,
developing, marketing, managing, owning, operating or selling vacation ownership
resorts other than the PGA Vacation Resort by Vistana or other properties that
may be developed by the parties.

     The Company has the right under the Affiliation Agreement, but not the
obligation, to include one or more of the PGA Vacation Resorts in a vacation
club or other exchange program in combination with other vacation resorts of
comparable or superior quality owned or operated by the Company or one of its
affiliates, subject to PGA of America's approval.

     In addition, the Company and PGA of America entered into a marketing
agreement under which the Company is granted access to the PGA mailing list
(which includes over 72,000 names of PGA members, apprentices and business
contacts) as well as media recognition in certain publications.

Risks Related to Joint Venture and Franchise Agreements

     The Company's joint venture and franchise agreements expose the Company to
certain restrictions, costs and risks. Although the Company is engaged in
discussions which may modify or eliminate such restrictions, the Promus
Agreement as originally executed prevents the Company from developing vacation
ownership resorts with other (non-Promus) multi-hotel brands and significantly
restricts the Company's ability to develop vacation ownership resorts under its
own name in certain markets. There can be no assurance that Promus will be a
favorable partner for the Company or that the Promus Agreement, as originally
executed, will not prevent the Company from developing resorts which would be in
the Company's best interests. The Promus Agreement provides, and the Company's
proposed joint venture agreement with Sun is expected to provide, that the
operating profits from a jointly-owned resort will be divided between the
partners in accordance with their respective partnership interests. There can be
no assurance that the benefits derived by the Company from the joint venture
relationship will be sufficient to justify sharing the percentage of operating
profits mandated by the joint venture agreement.

     Although the Company has entered into an agreement with Sun to form a joint
venture to develop and operate the planned Harborside at Atlantis resort in The
Bahamas, the parties have not yet completed negotiations for or entered into the
definitive joint venture agreement. Development of the Harborside at Atlantis
project is subject to the adoption of certain legislation in The Bahamas,
including legislation which would apply tariff exemptions on the importation of
construction materials to the development of vacation ownership resorts. The
project is also subject to the availability of satisfactory construction and
receivables financing. Financing for the resort may be more difficult or
expensive to obtain than comparable financing for the Company's other resorts
due to the foreign location of the project, the joint venture ownership and
legal structure for the resort, construction cost and other project-specific
factors.  There can be no assurance that the Company and Sun will enter into a
definitive joint venture agreement or that the other conditions necessary for
development of the resort will be satisfied.

     In order to maintain its franchise relationship with Promus or any other
franchisor, the Company may be required to incur expenditures and meet other
obligations at the franchised resorts required by the applicable franchise
agreements. These requirements may increase the Company's operating costs and
limit its flexibility with respect to the operation of the resort. The
expenditures which the Company may be required to incur and the obligations
which the Company may be required to satisfy will depend, 

                                     -14-
<PAGE>
 
among other things, on the extent to which the applicable franchise agreement
requires the Company to incur construction and development costs, resort and
other operating expenses, capital expenditures and maintenance costs. There is
no assurance that the Company will receive benefits from a franchise
relationship sufficient to justify these costs and the franchise fees paid to
the franchisor. If the Company were to decide to terminate a franchise agreement
relating to a resort, the Company could be required to pay a termination fee to
the franchisor and incur construction and other expenses in renaming or
rebranding the property.

Acquisition of Success and Points

     On September 16, 1997, the Company completed the acquisition (the
"Acquisition") of entities comprising The Success Companies, Success
Developments, L.L.C. and Points of Colorado, Inc. (collectively, "Success and
Points") from Donald J. Dubin, Larry D. Doll, Ronald R. Sharp, David E. Bruce
and David E. Friedman (collectively, the "Sellers").  Pursuant to the Agreement
and Plan of Reorganization dated as of August 15, 1997 (the "Agreement and Plan
of Reorganization"), the Company acquired all of the outstanding stock of
Success and Points for a purchase price consisting of approximately $24 million
in cash (financed with bank borrowings of approximately $24 million) and 638,444
shares of common stock of the Company, par value $.01 per share (the "Common
Stock").  Delivery of 430,814 of such shares is contingent upon Success and
Points achieving certain operating results on a quarterly basis during the
calendar years 1998 through 2000. For the year ended December 31, 1998,
approximately 140,000 shares were earned relative to the achievement of the
required results.  In addition, future earnings will be adversely impacted by
the amortization of the goodwill associated with the Acquisition. Based upon
recorded goodwill of approximately $17.2 million as of December 31, 1998 and an
amortization period of 20 years, earnings will be adversely impacted by
approximately $0.96 million per year. The goodwill included in this calculation
does not include the potential impact of the final two years of the contingent
consideration associated with the Acquisition.

     As part of the Acquisition, the Company acquired three vacation ownership
resorts: (i) the Villas of Cave Creek, near Scottsdale, Arizona; (ii) Eagle
Point Resort in Vail, Colorado; and (iii) Falcon Point Resort in Avon, Colorado.
See "Company Resorts."  In addition, Success and Points served, and the Company
is continuing to serve, as the exclusive marketing and sales agent for the
largest vacation ownership resort in Colorado, The Christie Lodge, located in
Avon. As a result of the Acquisition, the Company also acquired undeveloped land
in Avon, Colorado, on which it is completing the development of the Lakeside
Terrace Resort, and in Scottsdale, Arizona on which it is completing the
development of the Embassy Vacation Resort at Scottsdale.

     Success and Points provided a foundation for the Company's sales, marketing
and resort operations in the western region of the United States and also
provided the Company with experience in direct marketing to consumers in Arizona
and Colorado.  The Company believes that the strategic relationships and
operational expertise gained in the Acquisition have improved its ability to
identify additional developments and acquisitions in Arizona, Colorado and other
western states.

Additional Acquisitions and Expansion

     The Company regularly examines opportunities to acquire additional vacation
ownership resorts, additional land for the expansion or development of vacation
ownership resorts, and companies having vacation ownership assets, management,
or sales or marketing expertise relevant to the Company's existing 

                                     -15-
<PAGE>
 
or future business in the vacation ownership industry. Such acquisitions, if
consummated, may involve the issuance of additional debt or equity securities,
increased debt leverage, and business operations, geographic locations and risks
that are different from those associated with the Company's existing business.
There is no assurance that any such acquisitions will be consummated or, if
consummated, that they will be successfully integrated into the Company's
business.

Sales and Marketing

     Marketing Programs.  The Company's marketing programs vary by resort
location.  For Company resorts in the eastern United States, the primary
marketing programs are off-premise contacts, in-house contacts, telemarketing
and, primarily for resorts in Central Florida, off-site international contacts.
For Company resorts in the western United States, the primary marketing programs
are telemarketing and in-house contacts.  In addition to these programs, the
Company uses a variety of other marketing approaches, including vacation sampler
programs (designed to allow a prospective purchaser to be a guest at the resort
and experience vacation ownership before making a decision to buy) and, more
recently, strategic alliances and affinity and database marketing programs with
travel, lodging and recreation companies.  The Company intends to increase its
telemarketing, vacation sampler, and strategic alliance marketing programs
during future periods.  Each of the Company's marketing programs seeks to
provide consistent access to qualified prospective buyers and involves specific
target marketing to leisure industry customers.

     The Company's off-premise contact programs involve public contact marketing
by an employee of the Company who provides concierge-type services in the lobby
of a hotel or condominium vacation property, or at other attractions near one of
the Company's resorts.  The goal of these programs is to generate a regular flow
of qualified potential VOI purchasers to visit the on-site sales centers at the
Company's resorts.  Any loss or increase in the cost of the Company's off-site
contact sites could have a material adverse effect on the Company.  The
Company's in-house marketing programs focus on guests staying at its vacation
ownership resorts, whether they are owners, renters or exchangers.  Through a
combination of guest services and telephone contact, these guests are invited to
a VIP tour of the vacation ownership resort.  These programs are more effective
at larger and more mature resorts, such as Vistana Resort in Orlando, which have
a high number of owners, renters, and VOI exchangers.  The Company's
telemarketing programs use a combination of outgoing calls to potential
customers and incoming responses from direct mail and other promotions.

     Sales Focus.  The Company's marketing efforts are currently supported by
resort-based sales operations, which, in the Company's view, have been important
to the Company's successful performance during its history.  Prospective
purchasers visiting one of the Company's resorts are given a personalized on-
site tour of the resort and provided information about vacation ownership and
available financing options.  Presentations to potential buyers, which typically
last between one and one-half and four hours, are individually tailored to take
into account each guest's particular needs and background, such as vacationing
habits and familiarity with the vacation ownership concept.  Prior to closing,
each sale is verified by a settlement manager who reviews all documents and
pertinent facts of the sale with the purchaser and is available to answer any
questions that the new owner may have.  The Company is continuing to evaluate
new sales techniques.

     Because the most critical component of the Company's sales effort is its
sales personnel, the Company strives to attract, train and retain a superior
sales force.  The Company's policy is for each of its 

                                     -16-
<PAGE>
 
sales representatives to be a licensed real estate professional and undergo
instruction and training. In addition, except for certain independent
contractors primarily at the Company's western resorts, each sales
representative is an employee of the Company and receives full employment
benefits. See "Governmental Regulation."

     International Sales and Marketing.  In addition to its domestic operations,
the Company sells VOI's in its resorts to international customers.
International sales are made to customers visiting the United States, who are
generally contacted through one of the Company's off-premise or in-house
marketing programs described above.  International sales are also made to
foreign purchasers who buy the VOI "sight unseen" based upon the Company's
reputation for delivering a high quality vacation experience.  These prospective
customers are generally contacted through international brokers and direct sales
offices located in foreign countries, primarily South and Central America and
the Caribbean basin.  During the years ended December 31, 1998 and 1997,
approximately 20.0% and 34.0%, respectively, of the Company's sales were to
purchasers residing in countries other than the United States and Canada (with
all sales made in United States dollars).  In 1998 and 1997, substantially all
of the Company's sales to residents of countries other than the United States or
Canada involved Company resorts located in Central Florida.  Because of adverse
economic and weather conditions in South and Central America and hurricane
damage in the Caribbean basin during 1998, the Company closed several of its
off-site offices in South and Central America and is evaluating other action
intended to reduce the sales and marketing costs of its off-site international
business. Certain of these remedial actions may increase costs in the short
term. The Company's international sales generally involve higher sales and
marketing expenses and greater risks than its sales to domestic purchasers.
These risks include potential adverse effects from foreign governmental policies
and regulations, inflation, interest rates, price and wage controls, exchange
control regulations, exchange rates, taxation, political and social instability
and other political or economic developments in or affecting such foreign
jurisdictions.

Customer and Other Financing

     The Company extends financing to purchasers of VOI's at its resorts.  These
purchasers generally make a down payment equal to at least 10% of the sales
price and borrow the remaining sales price from the Company.  These borrowings
bear interest at fixed rates, are secured by first mortgages on the underlying
VOI's and amortize over periods ranging up to ten years.  As of December 31,
1998 and 1997, the Company had a portfolio of approximately 36,250 and 26,068
customer mortgages receivable, respectively, totaling approximately $223.3
million and $155.0 million, net, with an average stated (contractual) yield of
14.7% and 14.2%, per annum, respectively.  The Company funds its operations in
part by borrowing up to 90% of the aggregate principal amount of its eligible
customer mortgages receivable under its credit facilities.  As of December 31,
1998 and 1997, the Company had approximately $133.3 million and $79.2 million,
respectively, of indebtedness outstanding under its existing customer mortgages
receivable credit facilities (including the securitization Notes referred to
below) at a weighted average interest rate of 8.4% and 9.5% per annum,
respectively, secured by the Company's pledge of a portion of its customer
mortgages receivable. As of December 31, 1998 and 1997, the Company had loan
facilities secured by customer mortgages receivable with available but unused
capacity (assuming the availability of sufficient receivables) of up to $130.5
million and $115.0 million, respectively.  As of December 31, 1998 and 1997, (i)
approximately 2.7% and 3.0%, respectively, of the Company's customer mortgages
receivable were 60 to 120 days past due; and (ii) approximately 3.7% and 4.0%,
respectively, of the Company's customer mortgages receivable were more than 120
days past due and the subject of legal proceedings.  The 

                                     -17-
<PAGE>
 
Company maintains and periodically monitors an allowance for doubtful accounts
to provide for future losses associated with any defaults on customer mortgages
receivable through a provision for doubtful accounts. Management believes that
the allowance is adequate for such future losses. The Company's provision for
doubtful accounts for the years ended 1998 and 1997 was 7.4% and 6.9%,
respectively, of VOI sales. At December 31, 1998 and 1997, the allowance for
doubtful accounts was $19.2 million, or 8.6% of net period end customer
mortgages receivable, and $12.6 million, or 8.1% of such period end receivables,
respectively.

     In September 1998, the Company completed a private placement of $66.2
million in principal amount of timeshare mortgage-backed notes (the "Notes").
The outstanding balance of the Notes of $58.6 million as of December 31, 1998 is
included in the amount outstanding under its existing customer mortgages
receivable credit facilities referenced above.  The securitization was
structured as two classes of fixed-rate notes, with approximately $32.0 million
of 5.89% notes being rated 'AAA,' and $34.2 million of 6.28% notes being rated
'A,' by Duff & Phelps Credit Rating Co. ("DCR").  The Notes are secured by
approximately $71.1 million in first mortgage liens on VOI's sold by Vistana
subsidiaries in Florida and Colorado. The weighted average cost of the Notes,
including the yield on the Notes and the cost of a letter of credit used to
provide credit enhancement, is approximately 6.30% per annum.  The Notes were
issued through a bankruptcy-remote Vistana subsidiary.  The securitization was
treated as an on balance sheet financing for accounting purposes. The net
proceeds of the securitization were used primarily to repay $60.2 million of
outstanding debt secured by customer mortgages receivable and bearing interest
at LIBOR plus 2.5% and LIBOR plus 1.0%.

     The Company has historically derived net interest income from its financing
activities as a result of the positive difference between the interest rates it
charges its customers who finance their purchase of a VOI and the interest rates
it pays its lenders.  Because a substantial amount of the Company's indebtedness
bears interest at variable rates and the Company's customer mortgages receivable
bear interest at fixed rates, the Company bears the risk of increases in
interest rates with respect to this indebtedness.  The Company from time to time
has engaged, and may in the future engage, in limited interest rate hedging
activities in an effort to reduce the risk and impact of increases in interest
rates with respect to such indebtedness.  There is no assurance such activities
will be adequate to protect the Company from any adverse changes in interest
rates.  In addition, the Company also faces the risk that a reduction in
interest rates would cause customers to prepay their mortgages, which would
reduce the Company's income from financing activities.

     The Company does not presently have existing credit facilities or binding
lender commitments to supply all of the financing the Company anticipates that
it will need to finance its customer mortgages receivable, construct and develop
its existing and proposed resorts, and fund its ongoing operations, and there
can be no assurance that alternative or additional credit arrangements can be
obtained on terms that are satisfactory to the Company.  Future sales of VOI's
are significantly dependent upon the continued availability of funds to cover
the initial negative cash flow attributable to VOI sales financed by the Company
(i.e., the amount by which the Company's product cost and marketing, sales and
general and administrative expenses per VOI exceed the customer's down payment).
The acquisition, construction and development of future resorts and VOI
inventory are also significantly dependent upon the availability of financing.
If the Company were unable to obtain credit facilities or debt or equity
financing in amounts, and on terms and conditions, satisfactory to its needs,
such an event would have a material adverse effect on the Company's business and
results of operations.  If the Company were required to sell its customer
mortgages receivable in order to satisfy its cash flow needs, the Company would
cease to be eligible to 

                                     -18-
<PAGE>
 
report income attributable to sales of VOI's on the installment sales method for
federal income tax purposes and, as a result, the Company would be required to
accelerate the payment of a substantial federal income tax liability with
respect to the customer mortgages receivable sold. Such an event could have a
material adverse effect on the Company's cash flow from operations.

     The Company bears the risk of defaults under its customer mortgages on
VOI's.  If a purchaser of a VOI defaults on the mortgage during the early part
of the loan amortization period, the Company will not have recovered its
marketing, selling (other than commissions in certain events), and general and
administrative costs per VOI, and such costs will again be incurred in
connection with the subsequent resale of the repossessed VOI.  As is sometimes
the practice in the vacation ownership industry, the Company does not verify the
credit history of its customers.  Based on the Company's historical customer
default rate, the fact that its customers are required to make a down payment of
at least 10% of the purchase price of a VOI (which the Company views as
indicative of a customer's financial wherewithal to meet obligations under the
mortgage related to the VOI) and that the customer mortgage is secured by the
underlying VOI, the Company does not believe that credit history verification is
cost-effective or necessary.  However, the Company may elect to use credit
history verification or other underwriting practices in the future and such
practices, if implemented, could have the effect of reducing VOI sales or
increasing sales and marketing expense as a percentage of VOI sales.  In
addition, although in certain jurisdictions (including Florida) the Company may
seek recourse against a defaulting customer for the sales price of the VOI, the
Company has not historically pursued such a remedy.  Accordingly, there is no
assurance that the sales price will be fully or partially recovered from a
defaulting customer or, in the event of such defaults, that the Company's
allowance for loss will be adequate.

     Until recently, the Company had historically provided customer mortgages
receivable financing for up to seven years, as had been typical for the
industry.  Over the past several years, industry trends have been to lengthen
the term of certain such financing to up to ten years.  The Company has recently
begun to offer ten-year financing for some of its customer mortgages receivable.
Although the increased term has been introduced on a limited basis, there is no
assurance that the inclusion of customer mortgages with a ten-year maturity will
not have an adverse effect on the performance of the Company's portfolio of
customer mortgages receivable.

Resort Operations

     Resort Management Services.  The Company currently provides both
hospitality and homeowners' association management services at its existing
vacation ownership resorts, and intends to provide, or arrange for the provision
of, the same services, directly or through subcontracts with third parties, at
its future vacation ownership resorts pursuant to management agreements with the
homeowners' associations present at such resorts (which are comprised of owners
of VOI's at the resort or, in the case of Vistana Resort, a particular phase of
the resort).  Under each such management agreement, the Company is paid by the
applicable homeowners' association an annual management fee which is generally
equal to approximately 10% of applicable costs and expenses incurred by the
homeowners' association.  The Company is responsible for, and has authority
over, all activities necessary for the day-to-day operation of the resorts,
including administrative services, procurement of inventories and supplies, and
promotion and publicity.  Management agreements between the Company and the
homeowners' associations typically provide for an initial term of three or more
years, with automatic renewals.  In general, the homeowners' associations may
remove the Company as manager upon obtaining the requisite owner vote.  The
Company 

                                     -19-
<PAGE>
 
also provides, directly or indirectly, managerial and other employees necessary
for the operation of its resorts, whose duties include, among other things,
review of the maintenance of the resorts, preparation of reports, budgets and
projections and employee training. The Company may be exposed to risks
associated with existing resort operations and the commencement of new resort
operations including increased operating costs, acquiring/retaining qualified
personnel, and condominium related fees for unsold inventory.

     The Company historically has provided hospitality management services for
its vacation ownership resorts.  However, pursuant to management and
submanagement agreements with the Company, hospitality management services for
Embassy Vacation Resort at Myrtle Beach are provided, and hospitality management
services for the Embassy Vacation Resort at Scottsdale are expected to be
provided, by Promus.  Promus may also provide such services for any other future
resorts developed under franchise or joint venture agreements with Promus.  Sun
is expected to provide hospitality management services to the proposed
Harborside at Atlantis resort.  These hospitality management services furnished
by Promus and Sun are provided or expected to be provided for a negotiated
management fee which in some cases may result in a sharing of the homeowner
association management fee payable to the Company.

     VOI Unit Rental Operations.  The Company generates additional revenues at
its resorts that have an inventory of unused or unsold VOI's from the rental of
the unoccupied units on a nightly or weekly basis.  The Company offers these
unoccupied units through direct consumer sales (including telemarketing
promotions), travel agents and vacation package wholesalers.  In addition to
providing the Company with supplemental revenues, the Company's room rental
operations provide it with lead generation for the sale of VOI's.  As part of
the resort management services provided by the Company, at the request of a VOI
owner, the Company will seek to rent the owner's VOI in the event the owner is
unable to use or exchange it.  The Company generally charges the owner a fee
equal to 50% of the unit's rental rate, net of commission, for each completed
rental.

Other Operations

     Telecommunications Services.  The Company's telecommunications business
generates revenues from the installation of telephone, data and cable television
equipment and infrastructure at certain of its resorts, the rental of telephone
and related cable and equipment to the homeowners' associations, and the
provision of ongoing long-distance telephone and cable television service at its
resorts pursuant to contracts with the homeowners' associations.  The Company
also derives revenues from providing telecommunications design and installation
services as a contractor or subcontractor to third parties, including hotels,
universities, hospitals and airports.

                                     -20-
<PAGE>
 
Participation in VOI Exchange Networks

     Each of the Company's vacation ownership resorts participates in the
exchange network operated by RCI or, in the case of existing resorts acquired in
the Acquisition of Success and Points, II.  Membership in RCI or II allows the
Company's customers to exchange in a particular year their occupancy right in
the unit in which they own a VOI for an occupancy right at the same time or a
different time in another participating resort, based upon availability and the
payment of a variable exchange fee.  A member may exchange his or her VOI for an
occupancy right in another participating resort by listing the VOI as available
with the exchange network operator and by requesting occupancy at another
participating resort, indicating the particular resort or geographic area to
which the member desires to travel, the size of the unit desired and the period
during which occupancy is desired.  The exchange network assigns a rating to
each listed VOI, based upon a number of factors, including the location and size
of the unit, the quality of the resort and the period of the year during which
the VOI is available, and attempts to satisfy the exchange request by providing
an occupancy right in another VOI with a similar rating.  If RCI or II is unable
to meet the member's initial request, the network operator suggests alternative
resorts based on availability.  Participants in RCI and II generally pay an
annual membership fee plus an additional fee for each exchange. No assurance can
be given that the Company will continue to be able to qualify its existing
resorts, or will be able to qualify its future resorts, for participation in the
RCI exchange network or any other exchange network, or that the Company's
customers will continue to be satisfied with RCI's exchange network or any other
exchange network. If such exchange networks cease to function effectively, if
the Company's resorts are not accepted as exchanges for other desirable resorts,
or if RCI or II cease to be leading VOI exchange networks, the Company's sales
of VOI's could be materially adversely affected.

     The agreements between one of the Company's predecessors and RCI generally
provide that, until May 2001, the RCI exchange program will be the only exchange
program permitted at resorts developed by that entity and any other entity which
it controls.  In addition, Messrs. Gellein and Adler have agreed with RCI that,
until May 2001, each vacation ownership resort owned, developed or managed by an
entity in which Messrs. Gellein or Adler, individually or collectively, have a
controlling interest will execute an affiliation agreement with RCI with an
initial six-year term.

Competition

     The Company is subject to significant competition from other entities
engaged in the leisure and vacation industry, including vacation ownership
resorts, hotels, motels and other accommodation alternatives.

     The vacation ownership industry historically has been highly fragmented and
dominated by a large number of local and regional resort developers and
operators, each with small resort portfolios generally of differing quality.
More recently, many of the world's most widely-recognized lodging, hospitality
and entertainment companies have begun to develop and sell VOI's under their
brand names, including Marriott International, Inc., The Walt Disney Company,
Hilton Hotels Corporation, Hyatt Corporation, Four Seasons Hotels & Resorts,
Inc., Inter-Continental Hotels and Resorts, Inc., Westin Hotels & Resorts and
Promus.  In addition, other publicly-traded companies focused on the vacation
ownership industry, such as Sunterra Corporation, Fairfield Communities, Inc.,
Silverleaf Resorts, Inc., Trendwest Resorts, Inc. and Bluegreen Corporation have
competed, currently compete, or may in the future compete, with the Company.
Competition in the Orlando market is particularly intense, and includes many
nationally recognized lodging, 

                                     -21-
<PAGE>
 
hospitality and entertainment companies, as well as large privately-owned local
operators of vacation ownership resorts such as Central Florida Investments,
Inc. and Orange Lake Country Club. Significant competition also exists in other
markets in which the Company currently operates or is developing vacation
ownership resorts. Certain entities with which the Company competes possess
significantly greater financial, sales and marketing, personnel and other
resources than those of the Company and may be able to grow at a more rapid rate
or more profitably as a result. Management believes that competition in the
vacation ownership industry will be increased by consolidation in the industry,
by increased development of vacation ownership resorts by industry participants,
and by the entry of additional hospitality companies and other entities into the
vacation ownership industry.

Governmental Regulation

     General.  The Company's marketing and sales of VOI's and other resort
operations are subject to extensive regulation by the federal government and the
states in which the Company's resorts are located and in which its VOI's are
marketed and sold. Federal legislation to which the Company is or may be subject
includes the Federal Trade Commission Act, the Fair Housing Act, the Truth-in-
Lending Act, the Real Estate Settlement Procedures Act, the Equal Credit
Opportunity Act, the Interstate Land Sales Full Disclosure Act, the Telephone
Consumer Protection Act, the Telemarketing and Consumer Fraud and Abuse
Prevention Act and the Civil Rights Acts of 1964 and 1968. The Florida
Condominium Act and the Florida Vacation Plan and Timesharing Act extensively
regulate the creation and management of timeshare condominiums, the marketing
and sale of VOI's, the escrow of purchaser funds and other property prior to
completion of construction and closing, the content and use of advertising
materials and promotional offers, the creation and operation of exchange
programs and multi-site timeshare plan reservation systems, and the resale of
VOI's. Many other states have adopted similar legislation as well as specific
laws and regulations regarding the sale of VOI's. The laws of most states,
including Arizona, Colorado and Florida, require a designated state authority to
approve a detailed offering statement describing the developer and all material
aspects of the resort and sale of VOI's at such resort. In addition, the laws of
most states in which the Company sells VOI's grant the VOI purchaser the right
to rescind a contract of purchase at any time within a statutory rescission
period. Furthermore, most states have other laws which regulate the Company's
activities, such as real estate licensure laws, travel sales licensure laws,
anti-fraud laws, telemarketing laws, prize, gift and sweepstakes laws, and labor
laws. The Company believes that it is in material compliance with all applicable
federal, state, local and foreign laws and regulations to which it is currently
subject.

     Environmental Matters. Under various federal, state and local environmental
laws, ordinances and regulations, a current or previous owner or operator of
real estate may be required to investigate, remediate and remove hazardous or
toxic substances or petroleum product releases at such property, and may be held
liable to a governmental entity or to third parties for property damage and for
investigation, remediation and removal costs incurred by such parties in
connection with the contamination. These laws typically impose clean-up
responsibility and liability without regard to whether the owner or operator
knew of or caused the presence of the contaminants, and the liability under such
laws has been interpreted to be joint and several unless the harm is divisible
and there is a reasonable basis for allocation of responsibility. The cost of
investigation, remediation or removal of such substances may be substantial, and
the presence of such substances, or the failure to properly remediate the
contamination on such property, may adversely affect the owner's or operator's
ability to sell or rent such property or to borrow using such property as
collateral. Persons who arrange for the disposal or treatment of hazardous or

                                     -22-
<PAGE>
 
toxic substances at a disposal or treatment facility also may be liable for the
costs of removal or remediation of a release of hazardous or toxic substances at
such disposal or treatment facility, whether or not such facility is owned or
operated by such person. In addition, some environmental laws create a lien on
the contaminated site in favor of the government for damages and costs it incurs
in connection with the contamination. Finally, the owner or operator of a site
may be subject to common law claims by third parties based on damages and costs
resulting from environmental contamination emanating from a site. In connection
with its ownership and operation of its properties, the Company may be
potentially liable for such costs.

     The Company has conducted Phase I environmental assessments at each of its
existing resorts and properties under development in order to identify potential
environmental concerns.  These Phase I assessments have been carried out in
accordance with accepted industry practices and consisted of non-invasive
investigations of environmental conditions at the properties owned by the
Company, including a preliminary investigation of the sites and identification
of publicly known conditions concerning properties in the vicinity of the sites,
physical site inspections, review of aerial photographs and relevant
governmental records where readily available, interviews with knowledgeable
parties, investigation for the presence of above-ground and underground storage
tanks presently or formerly at the sites, a visual inspection of potential lead-
based paint and suspect friable asbestos containing materials where appropriate,
a radon survey, and the preparation and issuance of written reports.  The
Company's assessments of its properties have not revealed any environmental
liability that the Company believes would have a material adverse effect on the
Company's business, assets, financial condition or results of operations, nor is
the Company aware of any such material environmental liability.

     The Company believes that its properties are in compliance in all material
respects with all federal, state and local laws, ordinances and regulations
regarding hazardous or toxic substances.  The Company has not been notified by
any governmental authority or any third party, and is not otherwise aware, of
any material noncompliance, liability or claim relating to hazardous or toxic
substances or petroleum products in connection with any of its present
properties.

     Other Regulations.  Under various state and federal laws governing housing
and places of public accommodation, the Company is required to meet certain
requirements related to access and use by disabled persons.  Many of these
requirements did not take effect until after January 1, 1991.  Although
management believes that the Company's resorts are substantially in compliance
with present requirements of such laws, the Company may incur additional costs
of compliance in connection with the development of new resorts, or conversion
or renovation of existing resorts.  Additional legislation may impose further
burdens or restriction on owners with respect to access by disabled persons.
The ultimate amount of the cost of compliance with such legislation is not
currently ascertainable, and, while such costs are not expected to have a
material effect on the Company, such costs could be substantial.  Limitations or
restrictions on the completion of certain renovations may limit application of
the Company's growth strategy in some instances or reduce profit margins on the
Company's operations.

Employees

     As of December 31, 1998, the Company had approximately 3,009 full-time and
55 part-time employees and utilized the services of approximately 163
independent contractors as sales agents.  The Company believes that its
relations with its employees and independent contractors are good.  None of the
Company's employees are represented by a labor union.

                                     -23-
<PAGE>
 
Insurance

     The Company carries comprehensive liability, fire, windstorm, tropical
storm and business interruption insurance with respect to its properties and
interests in its resorts (including its inventory of unsold VOI's, construction
in process and developed land) with policy specifications, insured limits and
deductibles customarily carried for similar properties, which the Company
believes are adequate.  However, there are certain types of losses that are not
generally insured because they are either uninsurable or not economically
feasible to insure and for which the Company does not have insurance coverage.
Should an uninsured loss or a loss in excess of insured limits occur, the
Company could lose its investment in a resort as well as the anticipated future
revenues from such resort, and would continue to be obligated on any mortgage
indebtedness or other obligations related to the resort.  Moreover, if a
homeowners' association fails to adequately insure the property committed to the
condominium form of ownership (typically, all units, common areas, facilities
and amenities), any uninsured or under-insured casualty may affect the Company's
ability to collect customer mortgages receivable related to such condominium
property.  Certain of the Company's vacation ownership resorts are located in
areas that are susceptible to high winds, tropical storms, hurricanes, and
tornadoes.  The Company's resorts could suffer significant damage as a result of
such storms, floods and other natural disasters.  Any such damage, as well as
adverse weather conditions generally, could impair or delay the Company's
ability to sell VOI's at its existing resorts and complete the development of
its proposed resorts and in either event have a material adverse effect on the
Company's results of operations.

Other Risk Factors

     Investors considering an investment in the Company should carefully
consider the following information in conjunction with the other information
contained or incorporated by reference in this Annual Report; however, the
Company cautions the reader that the following risk factors and those discussed
previously or incorporated by reference may not be exhaustive.

     Limited Resale Market for VOI's.  The Company sells VOI's to buyers for
leisure and not investment purposes. The Company believes that the market for
resale of VOI's by such buyers is presently limited and that any resales of
VOI's are typically at prices substantially less than the original purchase
price. These factors may make ownership of VOI's less attractive to prospective
buyers. In addition, attempts by buyers to resell their VOI's may compete with
sales of VOI's by the Company. Moreover, the market price of VOI's sold by the
Company could be depressed by a substantial number of VOI's offered for resale
by the Company's customers.

     Risks Associated with Leverage.  The Company expects that its future
business activities will be financed, in whole or in part, with indebtedness
obtained pursuant to additional borrowings under the Company's existing credit
facilities or under credit facilities to be obtained by the Company in the
future. The definitive agreements with respect to existing credit facilities
contain, and those with respect to future facilities may contain, restrictive
covenants which limit the Company's ability to, among other things, make capital
expenditures, incur additional indebtedness and dispose of assets, or which
require the Company to maintain certain financial ratios. The indebtedness
incurred under these credit facilities may be secured by mortgages on a portion
of the Company's vacation ownership resorts, customer mortgages receivable and
other assets of the Company. In the event of a default by the Company under one
or more or these credit 

                                     -24-
<PAGE>
 
facilities, the lenders could foreclose on the vacation ownership resorts
secured by a mortgage or take possession of other assets pledged as collateral.
In addition, the extent of the Company's leverage and the terms of the Company's
indebtedness (such as requirements that the Company maintain certain debt-to-
equity ratios) could impair the Company's ability to obtain additional financing
in the future, to make acquisitions or to take advantage of business
opportunities that may arise. Furthermore, the Company's indebtedness and
related debt service obligations may increase its vulnerability to adverse
general economic and vacation ownership industry conditions and to increased
competitive pressures.

     Seasonality.  The Company's revenues are seasonal. Owner and guest activity
at the Company's resorts in the eastern United States are currently the greatest
from February through April and June through August. Owner and guest activity at
the Company's resorts in the western United States are currently the greatest
from June 15 to Labor Day and Christmas to Easter. As a result of this
seasonality, the Company currently anticipates its weakest operating results
during the first quarter, and its strongest operating results during the third
quarter, of each calendar year. However, as the Company opens new resorts and
expands into new markets and geographic locations it may experience increased or
different seasonality dynamics creating fluctuations in operating results that
are different from those experienced in the past.

     Dependence on Key Personnel.   The Company's success depends to a
significant extent upon the experience and abilities of Raymond L. Gellein, Jr.,
the Chairman of the Board, Co-Chief Executive Officer and a director of the
Company, and Jeffrey A. Adler, the President, Co-Chief Executive Officer and a
director of the Company. The loss of the services of one or both of these
individuals could have a material adverse effect on the Company and its business
prospects. The Company's continued success is also dependent upon its ability to
hire, train and retain qualified marketing, sales, hospitality, development,
acquisition, finance, management and administrative personnel. Such personnel
are in substantial demand and the cost of attracting or retaining such key
personnel could escalate over time. There can be no assurance that the Company
will be successful in attracting or retaining such personnel.

     Effective Control by Principal Shareholders; Shareholders' Agreement.
Jeffrey A. Adler and Raymond L. Gellein, Jr. (together with certain trusts
primarily for their benefit and the benefit of their family members and Mr.
Gellein's former spouse, the ''Principal Shareholders'') own and/or have voting
control of approximately 55.0% of the outstanding shares of common stock.  As a
result, by maintaining their ownership of common stock, the Principal
Shareholders have the power to exert substantial influence over the election of
the Board of Directors, the determination of the policies of the Company, the
appointment of the persons constituting the Company's management and the
determination of the outcome of corporate actions requiring shareholder
approval. In addition, pursuant to a shareholders' agreement, the Principal
Shareholders have agreed to vote their shares of Company common stock in favor
of proxies solicited by the Board of Directors, unless Messrs. Gellein and Adler
both disagree with the position taken by the Board of Directors.

     Volatility of Stock Price.  The Company's common stock first became
publicly traded on February 28, 1997. Since then, the per share price of the
common stock has fluctuated substantially.  The market price of the common stock
is likely to continue to be highly volatile and could be subject to wide
fluctuations in response to industry trends, quarterly variations in operating
results, announcements of new acquisitions, changes in financial estimates by
securities analysts or other events or factors. The market price of the common
stock also may be affected by the Company's ability to meet analysts'
expectations, 

                                     -25-
<PAGE>
 
and any failure to meet such expectations, even if minor, could have a material
adverse effect on the market price of the common stock. In addition, the stock
market has experienced significant price and volume fluctuations affecting the
market prices of equity securities within the vacation ownership and hospitality
industries and the market generally that have often been unrelated to the
operating performance of the companies issuing such securities. These industry
and broader market fluctuations may adversely affect the market price of the
Company's Common Stock. In the past, following periods of volatility in the
market price of a company's securities, securities class action litigation has
often been instituted against such a company. Any such litigation instigated
against the Company could result in substantial costs and a diversion of
management's attention and resources, which could have a material adverse effect
on the Company's business, results of operations or financial condition.

     Anti-Takeover Provisions.  Certain provisions of the Company's Articles of
Incorporation and By-Laws, as well as provisions of the Florida Business
Corporation Act, may be deemed to have anti-takeover effects and may delay,
defer or prevent a takeover attempt that a shareholder might consider to be in
the shareholder's best interest. For example, such provisions may deter tender
offers for shares of common stock, or deter purchases of large blocks of shares
of common stock, thereby limiting the opportunity for the Company's shareholders
to receive a premium for their shares of common stock over then-prevailing
market prices.  The Board of Directors of the Company consists of three classes
of directors.  Directors for each class are elected for a three-year term.  In
addition, the affirmative vote of two-thirds of the outstanding shares of common
stock is required to remove a director. These provisions may have the effect of
increasing the difficulty of one or more shareholders of the Company to elect
directors of their choice to the Board of Directors of the Company or to remove
a director.

  The Board of Directors has the authority to issue up to 5,000,000 shares of
preferred stock and to determine the price, rights (including voting rights),
preferences, privileges and restrictions of those shares without any vote of or
action by the shareholders. The rights of the holders of the common stock are
subject to, and may be adversely affected by, the rights of the holders of any
preferred stock that may be issued in the future. The issuance of the preferred
stock, while providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could make it more difficult for a
party to acquire a majority of the outstanding voting stock of the Company. The
Company has no present plan to issue any shares of preferred stock.

   Florida law contains provisions that may have the effect of delaying,
deferring or preventing a non-negotiated merger or other business combination
involving the Company. These provisions are intended to encourage any person
interested in acquiring the Company to negotiate with and obtain the approval of
the Company's Board of Directors in connection with the proposed transaction.
Certain of these provisions may, however, discourage a future acquisition of the
Company not approved by the Board of Directors in which shareholders might
receive an enhanced value for their shares, even though a substantial number or
majority of the Company's shareholders might believe the acquisition is in their
best interest. As a result, shareholders who desire to participate in such a
transaction may not have the opportunity to do so. Such provisions could also
discourage bids for the shares of common stock at a premium as well as create a
depressive effect on the market price of the shares of common stock.

     General Economic and Industry Conditions.  Any adverse change in economic
conditions or significant price increases or adverse events related to the
travel and tourism industry, such as the cost and availability of travel or
fuel, could have a material adverse effect on the Company's business. Such

                                     -26-
<PAGE>
 
conditions or increases may also adversely affect the future availability and
cost of financing for the Company or its customers and result in a material
adverse effect on the Company's business. In addition, changes in general
economic conditions may adversely affect the Company's ability to collect on its
customer mortgages receivable outstanding from the buyers of VOI's. Moreover,
because the Company's operations are conducted principally within the vacation
ownership industry, any adverse changes affecting the vacation ownership
industry such as (i) an oversupply of VOI's; (ii) a reduction in demand for
VOI's; (iii) changes in travel and vacation patterns; (iv) changes in
governmental regulation of the vacation ownership industry; (v) increases in
construction costs or taxes; (vi) changes in the deductibility of mortgage
interest payments for federal or state income tax purposes; or (vii) negative
publicity with respect to the vacation ownership industry, could have a material
adverse effect on the Company.

Item 2.  Properties.

     The Company's other owned properties include an office plaza consisting of
two three-story buildings (totaling approximately 67,000-square feet), which
house the Company's headquarters and administrative operations, a 27,000-square
foot two-story reception center and resort operations complex, maintenance and
laundry facilities, a freestanding general store and a gift shop.  All of these
other properties are owned by the Company, and are located within or adjacent to
Vistana Resort in Orlando.  At certain of the Company's resorts including
Vistana Resort in Orlando, Vistana Resort at World Golf Village, and the Embassy
Vacation Resort at Myrtle Beach, the Company owns guest registration and on-site
sales and marketing facilities.  The Company has subleased approximately 53,000
square feet of office space in the Orlando area for a new customer service and
call center, which the Company expects to begin occupying in May 1999.  In
addition, the Company leases office and warehouse space in various locations
near its existing resorts and resorts under development for sales and marketing,
construction and development, and administrative operations.

Item 3.  Legal Proceedings.

     The Company is currently subject to litigation and claims respecting
employment, tort, contract, construction and commission disputes, among others.
In the judgment of the Company, none of these lawsuits or claims against the
Company, if adversely decided, is expected to have a material adverse effect on
the Company, its business, results of operations or financial condition.

                                     -27-
<PAGE>
 
Item 4.  Submission of Matters to a Vote of Security Holders.

     No matters were submitted to a vote of the Company's shareholders during
the fourth quarter of its fiscal year ended December 31, 1998.

                                    PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

     The Company's initial public offering of common stock was consummated in
March 1997 (the "Initial Offering") at an initial public offering price of
$12.00 per share.  The Company's common stock is quoted on the Nasdaq National
Market under the symbol "VSTN." The following table sets forth, for the periods
indicated, the range of high and low sale prices for the common stock, as quoted
on the Nasdaq National Market.

<TABLE>
<CAPTION>
                                                                                    Common Stock
                                                                          ---------------------------------
                                                                               High              Low
                                                                          --------------   ----------------
<S>                                                                       <C>              <C>
Year Ending December 31, 1998:
   First Quarter.......................................................       $27 1/2            $20
   Second Quarter......................................................        29 3/4             16
   Third Quarter.......................................................        21 1/2             11
   Fourth Quarter......................................................        16 1/2              6 13/16
</TABLE>


<TABLE>
<CAPTION>
                                                                                    Common Stock
                                                                          ---------------------------------
                                                                               High               Low
                                                                          ---------------   ---------------
<S>                                                                       <C>               <C>
Year Ending December 31, 1997:
   First Quarter (commencing February 28, 1997)........................       $15 7/8           $11
   Second Quarter......................................................        15 1/2             9
   Third Quarter.......................................................        22 7/8            14  3/4
   Fourth Quarter......................................................        27 3/4            18  1/2
</TABLE>
          As of March 5, 1999, there were 21,224,172 shares of common stock
outstanding, held by approximately 66 shareholders of record.

     The Company has never declared or paid any cash dividends on its common
stock and does not anticipate declaring or paying cash dividends on its common
stock in 1999 or in the foreseeable future.  The Company currently intends to
retain future earnings to finance its operations and fund the growth of its
business.  Any payment of future dividends will be at the discretion of the
Board of Directors of the Company and will depend upon, among other things, the
Company's earnings, financial condition, capital requirements, level of
indebtedness, contractual restrictions in respect of the payment of dividends
and other factors that the Company's Board of Directors may deem relevant.

                                     -28-
<PAGE>
 
Item 6.  Selected Financial Data.

     There is hereby incorporated by reference the information appearing under
the caption "Selected Financial Data" appearing in the Company's 1998 Annual
Report to Shareholders.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of Operation.

     There is hereby incorporated by reference the information appearing under
the caption "Management's Discussion and Analysis of Financial Condition and
Results of Operation" appearing in the Company's 1998 Annual Report to
Shareholders.

Item 7A.  Quantitative & Qualitative Disclosures about Market Risk

     The Company is exposed to interest rate changes primarily as a result of
its notes and mortgages payable used to finance customer mortgages receivable
originated from financing customer purchases of VOI's as well as to finance the
acquisition and development of vacation ownership resorts and related inventory
and to fund working capital.  The Company is also exposed to interest rate
changes with respect to its customer mortgages receivable which earn interest at
fixed rates.  The Company's interest rate risk management objective is to limit
the impact of interest rate changes on earnings and cash flows and to lower its
overall borrowing costs.  To achieve its objectives the Company may enter into
derivative financial instruments such as interest rate swaps in order to
mitigate its interest rate risk on a related financial instrument.  The Company
does not enter into derivative or interest rate transactions for speculative
purposes.

     The Company's interest rate risk is monitored using a variety of
techniques.  The table below presents the principal amounts, weighted average
interest rates, fair values and estimated repayments by year of expected
maturity to evaluate the expected cash flows and sensitivity to interest rate
changes. The estimated principal repayments of fixed and variable rate debt by
year reflect the scheduled repayments for notes and mortgages payable secured by
real estate and other notes and mortgage loans payable as well as estimated
repayments on notes payable secured by customer mortgages receivable which do
not have fixed amortization dates.  All collections of principal and interest on
the customer mortgages receivable serving as collateral for these notes are paid
to the lender on a monthly basis.  Payments are first applied to outstanding
interest and then to principal.

                                     -29-
<PAGE>
 
<TABLE>
<S>                         <C>        <C>       <C>       <C>       <C>       <C>          <C>        <C>
                                                                                                         Fair
(in thousands)                 1999       2000      2001      2002      2003   Thereafter   Total       Value
                            -------    -------   -------   -------   -------   ----------   --------   --------
Fixed rate debt             $20,495    $15,447   $13,752   $11,410   $     8      $    54   $ 61,166   $ 61,166
Average interest rate          6.11%
 
Variable rate LIBOR debt    $79,296    $20,311   $ 5,362   $ 5,230   $   656           --   $110,855   $110,855
Average interest rate          7.37%
 
Variable rate prime debt    $24,373    $17,044   $10,772   $13,836   $ 4,598           --   $ 70,623   $ 70,623
Average interest rate          9.75%
---------------------------------------------------------------------------------------------------------------- 
Customer mortgages
   receivable               $81,001    $51,645   $43,652   $29,194   $20,209      $17,562   $243,263   $244,093
Average stated rate            14.7%
</TABLE>

     As the table incorporates only those exposures that existed as of December
31, 1998, it does not consider exposures or positions which could arise after
that date.  Moreover, because the Company had loan facilities with available but
unused capacity (assuming the availability of sufficient collateral) that are
not presented in the table above, the information presented has limited
predictive value.  As a result, the Company's ultimate realized gain or loss
with respect to interest rate fluctuations will depend on the exposures that
arise during the period, the Company's hedging strategies at that time, and the
levels of market interest rates.  At December 31, 1998, the carrying amounts of
variable rate debt approximated fair value as the interest rates on the
underlying instruments reprice frequently.  In addition, because of its issuance
in September of 1998, the carrying amount of fixed rate debt approximated fair
value at December 31, 1998.

Item 8.  Financial Statements and Supplementary Data.

     There is hereby incorporated by reference from the Company's 1998 Annual
Report to Shareholders the Consolidated Balance Sheets as of December 31, 1998
and 1997, the Consolidated Statements of Income, Shareholders' Equity and Cash
Flows for each of the years in the three year period ended December 31,
1998, the Notes to Consolidated Financial Statements, and the Report of KPMG
LLP, the Company's Independent Auditors.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

     None.
                                    PART III

Item 10.  Directors and Executive Officers of the Registrant.

     There is hereby incorporated by reference the information appearing under
the captions "Proposal 1:  Election of Directors" and "Executive Officers" in
the Company's definitive proxy statement for its 1999 Annual Meeting of
Shareholders.

Item 11.  Executive Compensation.

                                     -30-
<PAGE>
 
     There is hereby incorporated by reference the information appearing under
the captions "Executive Officers-Executive Compensation" and "Executive
Officers-Employment Agreements" in the Company's definitive proxy statement for
its 1999 Annual Meeting of Shareholders.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

     There is hereby incorporated by reference the information appearing under
the caption "Security Ownership of Certain Beneficial Owners and Management" in
the Company's definitive proxy statement for its 1999 Annual Meeting of
Shareholders.

Item 13.  Certain Relationships and Related Transactions.

     There is hereby incorporated by reference the information appearing under
the caption "Executive Officers-Certain Relationships and Related Transactions"
in the Company's definitive proxy statement for its 1999 Annual Meeting of
Shareholders.

                                     -31-
<PAGE>
 
                                    PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)  The following documents are filed as part of this report:

     (1)  Financial Statements

          There is hereby incorporated by reference from the Company's 1998
          Annual Report to Shareholders the following:

               (i)    Report of Independent Auditors;

               (ii)   Consolidated Balance Sheets as of December 31, 1998 and
                      1997;

               (iii)  Consolidated Statements of Income for each of the years in
                      the three-year period ended December 31, 1998;

               (iv)   Consolidated Statements of Shareholders' Equity for each
                      of the years in the three-year period ended December 31,
                      1998;

               (v)    Consolidated Statements of Cash Flows for each of the
                      years in the three-year period ended December 31, 1998;
                      and

               (vi)   Notes to Consolidated Financial Statements.

     (2)  Financial Statement Schedules

          None.


     (3)  Exhibits:

                                 EXHIBIT INDEX

Exhibit
Number     Document Description
-------    --------------------

  2.1     Agreement and Plan of Reorganization dated as of August 15, 1997 among
          Vistana, Inc., V Sub-1, Inc., Donald J. Dubin, Ronald R. Sharp, David
          E. Bruce, Larry D. Doll, and David H. Freidman and Schedule 1.5A
          thereto (incorporated by reference to the correspondingly numbered
          exhibit to the Current Report on Form 8-K dated September 29, 1997 of
          Vistana, Inc. (File No. 0-29114))

 *2.1-A   Amendment No. 1 to Agreement and Plan of Reorganization dated as of
          March 18, 1999 among Vistana, Inc., Vistana West, Inc., Donald J.
          Dubin, Ronald R. Sharp, David E. Bruce, Larry D. Doll, and David H.
          Friedman. (6)

  3.1     Articles of Incorporation of Vistana, Inc. (1)

                                     -32-
<PAGE>
 
  3.2     Amended and Restated By-Laws of Vistana, Inc. (2)

  4.1     Form of Common Stock certificate of Vistana, Inc. (1)

  10.1    Employment Agreement, dated as of December 27, 1996, between Vistana,
          Inc. and Raymond L. Gellein, Jr. (1, 3)

 *10.1-A  Letter amendment dated May 28, 1998 between Vistana, Inc. and Raymond
          L. Gellein, Jr. (3)

 *10.1-B  Second Amendment dated March 4, 1999 between Vistana, Inc. and
          Raymond L. Gellein, Jr. (3)

  10.2    Employment Agreement, dated as of December 27, 1996, between Vistana,
          Inc. and Jeffrey A. Adler (1, 3)

 *10.2-A  Letter amendment dated May 28, 1998 between Vistana, Inc. and Jeffrey
          A. Adler (3)

 *10.2-B  Second Amendment dated March 4, 1999 between Vistana, Inc. and
          Jeffrey A. Adler (3)

  10.3    Employment Agreement, dated as of December 27, 1996, between Vistana,
          Inc. and Matthew E. Avril (1, 3)

  10.3-A  Resignation Agreement dated as of September 30, 1998 between Vistana,
          Inc. and Matthew E. Avril (4)
 
  10.3-B  Consulting Agreement dated as of September 30, 1998 between Vistana,
          Inc. and Matthew E. Avril (4)

  10.4    Employment Agreement, dated as of December 27, 1996, between Vistana,
          Inc. and Susan Werth (1, 3)

 *10.4-A  Letter amendment dated May 28, 1998 between Vistana, Inc. and Susan
          Werth (3)

 *10.4-B  Second Amendment dated March 4, 1999 between Vistana, Inc. and
          Susan Werth (3)

  10.5    Employment Agreement, dated as of December 27, 1996, between Vistana,
          Inc. and Carol Lytle (1, 3)

  10.6    Employment Agreement, dated as of February 10, 1997, between Vistana,
          Inc. and John M. Sabin (1, 3)

  10.6-A  Agreement, dated as of February 5, 1998, between Vistana, Inc. and
          John M. Sabin (3, 5)

  10.6-B  Employment Agreement, dated as of November 18, 1997, between Vistana,
          Inc. and Charles E. Harris (3, 5)

 *10.6-C  Letter amendment dated May 28, 1998 between Vistana, Inc. and
          Charles E. Harris (3)

 *10.6-D  Second Amendment dated March 4, 1999 between Vistana, Inc. and
          Charles E. Harris (3)

 *10.6-E  Employee Agreement, dated as of January 30, 1998, between Vistana,
          Inc. and Mark E. Patten (3)

 *10.6-F  First Amendment dated March 4, 1999 between Vistana, Inc. and Mark
          E. Patten

                                     -33-
<PAGE>
 
  10.7    Amended and Restated Subscription Agreement, dated as of February 10,
          1997, among Vistana, Inc. and each of the persons whose signatures
          appear on the execution pages thereof (1)

  10.8    Vistana Stock Plan (1, 3)

  10.8-A  Vistana, Inc. Stock Plan as amended through May 15, 1998 (incorporated
          by reference to Exhibit 4.1 to the Registration Statement on Form S-8
          of Vistana, Inc. (File No. 333-53283)) (3)

 *10.9    Vistana, Inc. Employee Stock Purchase Plan as amended through May 15,
          1998 (3)

  10.10   Form of Indemnification Agreement between Vistana, Inc. and certain
          officers and directors of Vistana, Inc. (1)

  10.11   Registration Rights Agreement, dated as of February 10, 1997, among
          Vistana, Inc., the Raymond L. Gellein, Jr. Retained Annuity Grantor
          Trust, the Matthew James Gellein Irrevocable Trust, the Brett Tyler
          Gellein Irrevocable Trust, the Raymond L. Gellein, Jr. Revocable
          Trust, the JGG Holdings Trust, the Jeffrey A. Adler Revocable Trust,
          Matthew E. Avril, Susan Werth, Carol A. Lytle, John M. Sabin, Barbara
          L. Hollkamp, James A. McKnight, William McLaughlin and Alain Grange
          (1)

  10.11-A Joinder to Registration Rights Agreement, dated as of November 18,
          1997, between Vistana, Inc. and Charles E. Harris (5)

  10.11-B Assignment and Assumption Agreement, dated as of December 21, 1997,
          between Raymond L. Gellein, Jr., Trustee of Raymond L. Gellein, Jr.
          Revocable Trust, and NevWest Limited Partnership (5)

  10.11-C Assignment and Assumption Agreement, dated as of December 21, 1997,
          between Raymond L. Gellein, Jr., Trustee of JGG Holdings Trust, and
          NevEast Limited Partnership (5)

  10.11-D Assignment and Assumption Agreement, dated as of December 21, 1997,
          between Jeffrey A. Adler, Trustee of Jeffrey A. Adler Trust, and Rija
          Limited Partnership (5)

 *10.11-E Amendment No. 1 to Registration Rights Agreement dated as of March 5,
          1999 among Vistana, Inc. and the individuals, trusts and partnerships
          that are signatories thereto

  10.12   Agreement for Affiliation, dated as of May 26, 1995, among Resort
          Condominiums International, Inc., Vistana Development, Ltd., Raymond
          L. Gellein, Jr. and Jeffrey A. Adler (1)

  10.13   Limited Partnership Agreement of Vistana WGV, Ltd., dated as of June
          28, 1996, among Vistana WGV Holdings, Inc., Vistana WGV Investment,
          Ltd., United Timeshares, Inc. and A. Zimand WGV Investment, Inc. (1)

 *10.13-A First Amendment to Limited Partnership Agreement, dated as of June 30,
          1998 among Vistana WGV Holdings, Inc., Vistana WGV Investment, Inc.,
          United Timeshares, Inc., A. Zimand WGV Investment, Inc. and National
          Coal Company

  10.14   Parcel One Property Sale Agreement, dated as of June 4, 1996, by and
          Between SJH Partnership, Ltd. and Vistana WGV, Ltd. (1)

  10.15   Amended and Restated Joint Venture Agreement, dated as of June 25,
          1996, among R. Edward 

                                     -34-
<PAGE>

          Noble, Andrew E. Kidd, Noble-Kidd Corporation and VCH Oaks, Ltd. (1)
 
  10.16   Limited Partnership Agreement of VCH Oaks, Ltd., dated as of June 25,
          1996, among VCH Oaks, Inc., R. Edward Noble, Andrew E. Kidd and
          Vistana OP Investment, Ltd. (1)

  10.17   Exclusive Joint Venture Agreement, dated as of December 24, 1996,
          between Vistana Development, Ltd. and Promus Hotels, Inc. (1)

  10.17-A First Amendment to Exclusive Joint Venture Agreement, dated February
          7, 1997, between Vistana Development, Ltd. and Promus Hotels, Inc. (1)

  10.17-B Second Amendment to Exclusive Joint Venture Agreement, dated February
          27, 1997 between Vistana Development, Ltd. and Promus Hotels, Inc. (2)

  10.17-C Third Amendment to Exclusive Joint Venture Agreement, dated May 1,
          1997 between Vistana Development, Ltd. and Promus Hotels, Inc. (2)

  10.18   Land Purchase Agreement, dated as of December 30, 1996, between Myrtle
          Beach Farms Company Inc. and Vistana Myrtle Beach, L.P. (1)

  10.19   Purchase and Sale Agreement dated as of August 12, 1997 by and between
          PGA Golf Development, Inc. and Vistana PSL, Inc.(2)

  10.19-A First Amendment to Purchase and Sale Agreement dated as of September
          12, 1997 by and between PGA Golf Development, Inc. and Vistana PSL,
          Inc. (2)

  10.19-B Second Amendment to Purchase and Sale Agreement dated as of September
          17, 1997 by and between PGA Golf Development, Inc. and Vistana PSL,
          Inc. (2)

  10.20   Affiliation Agreement dated as of September 15, 1997 by and between
          PGA Golf Properties, Inc. and Vistana, Inc. (2)

  10.21   Loan and Security Agreement, dated as of November 1, 1997, between
          Vistana Timeshare Mortgage Corp., as Borrower, and Dresdner Bank AG
          New York and Grand Cayman Branches, as Lender (5)

*10.21-A  Amendment to Loan and Security Agreement dated as of November 24, 1998
          between Vistana Timeshare Mortgage Corp. and Dresdner Bank AG New York
          and Grand Cayman Branches.

  10.22   Line of Credit Agreement, dated as of November 1, 1997, among Vistana,
          Inc. and Vistana Development, Ltd. and Dresdner Bank AG New York and
          Grand Cayman Branches (5)

  10.23   Revolving Credit Facility Agreement dated as of July 9, 1998 between
          FINOVA Capital Corporation and Vistana, Inc. (4)

  10.24   Indenture dated as of July 31, 1998 between Vistana 1998-A Timeshare
          Mortgage Corp. and Norwest Bank Minnesota, National Association. (4)
 
  10.25   Servicing Agreement dated as of July 31, 1998 between Vistana 1998-A
          Timeshare Mortgage Corp. and VCH Portfolio Services, Inc. (4)

 *10.26   Master Vistana Resort Construction Loan Facility dated as of October
          9, 1998 between Heller 

                                     -35-
<PAGE>

          Financial, Inc. and Vistana, Inc.
 
 *10.27   Master Vistana Resort Receivables Loan Facility dated as of December
          30, 1998 between Heller Financial, Inc. and Vistana, Inc.

 *13.1    Vistana, Inc. 1998 Annual Report to Shareholders

 *21.1    List of subsidiaries of Vistana, Inc.

 *27.1    Financial Data Schedule
_________
*Filed herewith.

     (1) Incorporated by reference to the correspondingly numbered exhibit to
         the Registration Statement (File No. 333-19045) on Form S-1, as
         amended, filed by Vistana, Inc. under the Securities Act of 1933, as
         amended.

     (2) Incorporated by reference to the correspondingly numbered exhibit to
         the Registration Statement (File No. 333-38187) on Form S-1, as
         amended, filed by Vistana, Inc. under the Securities Act of 1933, as
         amended.

     (3) Management contract or compensatory plan or arrangement.

     (4) Incorporated by reference to the correspondingly numbered exhibit to
         the Company's Quarterly Report on Form 10-Q dated November 16, 1998.

     (5) Incorporated by reference to the correspondingly numbered exhibit to
         the Company's Annual Report on Form 10-K dated March 26, 1998.

     (6) In accordance with Rule 601(b)(2) of Regulation S-K, the exhibits and
         the disclosure schedules to this Agreement have not been filed. Vistana
         agrees to furnish supplementally a copy of any such omitted exhibit or
         schedule to the Commission upon request.

(b)  Reports on Form 8-K.

     There were no reports on Form 8-K filed by the Company during the year
     ended December 31, 1998.

                                     -36-
<PAGE>
 
                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City Orlando,
State of Florida, on March 23, 1999.

                              Vistana, Inc.


                              By:    /s/  Raymond L. Gellein, Jr.
                                   -------------------------------------
                                   Name:  Raymond L. Gellein, Jr.
                                   Title: Chairman of the Board and Co-Chief
                                          Executive Officer


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed on March 23, 1999 by the following persons on behalf of
the registrant and in the capacities indicated:

<TABLE> 
<CAPTION> 
<S>                                    <C> 
/s/ RAYMOND L. GELLEIN, JR.             Chairman of the Board, Co-Chief Executive Officer
----------------------------------      and Director (Principal Executive Officer)
Raymond L. Gellein, Jr.

 
/s/ JEFFREY A. ADLER                    President, Co-Chief Executive Officer and Director
----------------------------------
Jeffrey A. Adler

 
/s/ CHARLES E. HARRIS                   Vice Chairman of the Board, Chief Financial
----------------------------------      Officer, Treasurer and Director (Principal
Charles E. Harris                       Financial Officer)
 
 
/s/ MARK E. PATTEN                      Vice President and Chief Accounting Officer
----------------------------------      (Principal Accounting Officer)
Mark E. Patten
 
/s/ JAMES G. BROCKSMITH, JR.            Director
----------------------------------
James G. Brocksmith, Jr.
 
/s/ LAURENCE S. GELLER                  Director
----------------------------------
Laurence S. Geller
 
/s/ STEVEN J. HEYER                     Director
----------------------------------
Steven J. Heyer
</TABLE>

                                     -37-